Archive for November, 2011

Crowdsource Funding Amendment to Securities Act for Entrepreneurs & Start-Ups Close to Passage in Congress

Tuesday, November 15th, 2011

The concept of crowdsource funding via a securities offering is gaining support in both Houses of Congress. The current regulatory environment prohibits these types of securities offerings. The House of Representatives passed the “Entrepreneur Access to Capital Act” (H.R. 2930) on November 3, 2011. Shortly thereafter, the Senate proposed its own Bill “Democratizing Access to Capital Act (S.1791).” The objective is to create a new exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) that would allow entrepreneurs and start-up companies to accept investments in smaller increments from non-accredited investors. The Bills need to be reconciled and the legislative process will need to unfold. It is clear, however, that this movement is gaining momentum from both Congress and The White House. Assuming the amendment passes in one form or another, the crowdsource funding platform will significantly impact the ability for entrepreneurs and start-ups to obtain financing.

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