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Crowdfunding boosted by new SEC rules

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Crowdfunding boosted by new SEC rules

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Crowdfunding has been one of the social stories of 2013, both for the funding of private projects and civic ones.  Indeed crowdfunding has even stretched its tenticles into areas such as university funding over the past year.

As we’ve seen with airBnB and New York City however, not everyone is a fan of the growth of such collaborative marketplaces.  So it will no doubt come as some relief to the industry that the Securities and Exchange Commission seem to be firmly on the side of crowdfunders.

A ruling issued last week by the SEC lifted an 80 year ban on soliciting for investment by private companies.  Suffice to say, the crowdfunding market was pretty happy about that, because that’s kinda what they do.  It also changed who can invest in a start-up.  Traditionally only accredited investors such as venture capital companies could invest in a new firm, but new rules aim to open the field to anyone wishing to invest.

So it will now be much easier for crowdfunding ventures to use social media and other online tools to promote their ideas and raise cash.  Naturally many in the more traditional fields of venture funding are concerned that the new rules will see an increase in fraudulent activity, but only time will tell if that will actually be the case or not.  In the meantime though, it seems likely that we’ll be seeing a big increase in crowdfunded ventures.

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