April 2, 2013
Crowdfunding attempts to solve the problem many startups face when they go to look for funding and want to engage customers and the community in supporting the business.
Currently, less than 10 percent of viable startups can find seed stage or venture capital funding, Mosier said. That’s because only 5 million to 7 million people nationwide are accredited investors.
We spoke at SA New Tech this evening to talk about crowdfunding and accredited investors. An accredited investor is someone with a high-networth that meets standards set by the U.S. Securities and Exchange Commission.
Last year, President Obama signed into law the JOBS Act, which allows for equity-based crowdfunding. Although SEC regulators have not yet issued rules that allow Greenhouse as a crowdfunding portal to begin accepting investments from unaccredited investors, in the future ordinary people can invest in startups through a funding portal. If the SEC rules are approved in 2013, this will allow companies to fundraise from unaccredited investors.