It used to be hard for businesses to raise money in exchange for a piece of the company through crowdfunding. That has changed.
Last year, the Securities and Exchange Commission relaxed the once-onerous crowdfunding rules for companies and reduced the liabilities for online platforms that wanted to host these campaigns. Now that the dust has settled, a new wave of services are appearing to help both established companies and start-ups take advantage.
Stephen Bronner writes on Entrepreneur that “as of today, about $11.7 million had been raised for businesses using equity crowdfunding. This count includes three projects that have raised $1,000,000, the maximum amount allowed by law.” That’s not a lot. But the number is expected rise now that some bigger players are getting involved.
One of those players is the popular crowdfunding site Indiegogo. The company is partnering with MicroVentures, another player in the equity crowdfunding space, so that start-ups can list their offerings on both sites to expand their potential reach. The new service will also automate legal documents and provide an online disclosure questionnaire to ease the complexity of the application process.
Indiegogo has already raised more than $1 billion from over 8 million people and says it’s “well-positioned” to help entrepreneurs navigate the new crowdfunding rules. Already four companies, including two game makers and a music marketplace, have started campaigns. Thankfully, no one yet has raised $55,000 to make potato salad like this guy did a few years ago.
“It’s great to see an industry leader in the rewards crowdfunding space jump into the equity arena,” Kendall Almerico, chief executive of BankRoll Ventures and an attorney who works with crowdfunding campaigns said in the Entrepreneur report.