Last week the SEC passed Title IV of the JOBS Act, this substantially changed the crowdfunding scene in the US. One of the main changes this legislation has brought in is that non-accredited investors can now get involved in equity crowdfunding. Albeit that they are limited to investing no more than 10% of their net income. Originally only accredited investors, those with $200,000 of income a year or with a net worth of $1 million could invest.
However, the previous definition of crowdfunding has changed slightly. In order to raise money under Title IV platforms have to be registered with a broker-dealer (or affiliated with a broker-dealer), as well as having a certain level of net capital and register with FINRA. This may prompt a certain amount of consolidation within the industry as not all platforms will want or be able to adapt to these new regulations.
Slava Rubin, Indiegogo co-founder and CEO, commented:
“We’re encouraged by the SEC’s progress towards finalizing equity crowdfunding rules. The balanced regulations announced yesterday will not only protect investors but allow anyone to invest in the ideas they believe in. Our mission at Indiegogo is to democratize finance and we are continuing to explore how equity crowdfunding may play a role in our business model.”
Indiegogo operates in over 200 countries and so it would have a big impact on the global crowdfunding space if the company decided to introduce equity crowdfunding onto its platform worldwide. We will be watching to see if there are any more developments on this story.