Title III JOBS Act

 Title III JOBS Act

Title III of the JOBS (Jumpstart Our Business Startups) Act, which expands the capabilities of equity crowdfunding platforms by allowing non-accredited investors the opportunity to privately invest in companies, came into effect on May 16th.  This is a major change for the early-stage venture capital industry, entrepreneurs, and retail investors, as the pool of potential investors has swelled.  This should provide a capital infusion for new businesses that do not fit the mold for a traditional VC. This also creates new opportunities for investors to invest in young companies for equity, rather than a product or special pricing.

Highlights:

  • equity crowdfunding transactions by a non-accredited investor must now take place within a SEC-regulated broker-dealer or funding portal
  • limits on the amount a company can receive within a year, meaning that fundraising cycles will become shorter.
  • investors making less than $100,000 per year can only invest up to 5% ($2,000) of their annual income through crowdfunding; those above $100,000 per year can invest up to 10% of their annual income, but no more than $100,000
  • companies must now disclose a more extensive amount of information concerning the company and its financial data
  • non-accredited investors are only able to sell their shares after one year.  However, an accredited investor may purchase shares, if necessary, from a non-accredited investor prior to one year

 

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Hi. We're not around right now. But you can send us an email and we'll get back to you, asap.

Thanks, Ken

Ken Margolis | Managing Partner Castle Placement, LLC
1460 Broadway Street, Rte 400
New York, New York 10036
(212) 418-1188 | C: (516) 712-7784
kmargolis@castleplacement.com

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