Last week, the U.S. House of Representatives passed a crowdfunding bill that will allow startups to offer and sell securities via crowdfunding sites and social networks. If passed by the Senate and signed off on by the President, the bill will become a law, giving entrepreneurs new options for raising money for their companies.
Here’s a look at the current and proposed crowdfunding rules, and how this bill could shake things up for startups.
What is crowdfuding? As the term suggests, crowdfunding is funding from a crowd of people; that is, many people provide small amounts of money to finance something. Crowdfunding has its roots in charitable causes, including the advent of microfinancing to provide financial services to poor people, but has progressed to the online funding of creative and other projects via sites like Kickstarter and Rockethub.
Under current laws, startups may not sell stock or other securities through crowdfunding sites or social networks, such as Twitter or Facebook. They may, however, accept donations. This is because of applicable federal securities laws, which have been in place (in one form or another) since the 1930s. The laws including the following:>>> READ MORE at: