What took place today is nothing short of revolutionary! The SEC promulgated Regulation Crowdfunding to give effect to Title III of the JOBS Act. Private businesses can seek now funding from “retail” investors. This means that everyone can invest in startup shares regardless of their income. The new rules go live in 90 days.
Crowdfunding advocate Douglas Ellenoff noted that listening to the SEC staff and commissioners discuss these new rules reminded him of the powerful policy reasons for enacting many of the provisions of the JOBS Act – to facilitate and ease the process by which entrepreneurs may solicit funds and increase their prospects, which will result in the financing of numerous dreams and the creation of jobs.
The SEC has placed investment limits on how much any individual can invest in order to reduce the risk of retail investors laying their money in these private ventures. This strikes the appropriate balance between the SEC’s aim of active capital markets and investor protection and marks the way for this new capital raising path.
Finally there is an opportunity to view potential opportunities in the light of day with the scrutiny of the crowd and adequate investor limits. This is an opportunity to reorient USA’s population with respect to investments and coach people about wealth creation and capital formation. Crowdfunding could be the route for retail investors into the broader investing community and asset classes.
The securities offered pursuant to the new rules will be freely tradable after one year. Cadia Startup Exchange with its already working secondary market provides the best options for the interested investors to facilitate secondary trading through its unique bidding system in a secure, fast and cost effective way.