New Rules Allow Small Businesses and Start-Ups to Raise Capital Online and Through Social Media from Small Investors
Washington, D.C. - Colorado U.S. Senator Michael Bennet today applauded the implementation of the final crowdfunding rules by the Securities and Exchange Commission (SEC). Crowdfunding will provide a new avenue for Colorado small businesses and start-ups to acquire capital while ensuring strong protections for individuals who make small investments in these businesses. Bennet was a lead sponsor of the CROWDFUND Act, which was signed into law in 2012, that initiated the SEC's rulemaking process.
"Crowdfunding has incredible potential to help Colorado's small businesses and entrepreneurs grow their business, our state's economy, and create new jobs," Bennet said. "Businesses now have a new and innovative tool to help raise the capital they need while offering new opportunities for individuals to make investments with proper safeguards. The rapid pace of innovation requires that we constantly learn how to safely advance ways, such as crowdfunding, to build our economy and support the nascent industries and businesses that create jobs in the 21st century economy."
The crowdfunding provisions signed into law provide an alternative to the process for small businesses to raise capital. They allow companies to raise up to $1,000,000 annually through internet websites registered with the SEC.
The law requires the SEC to implement basic marketplace protections for the retail investors seeking to take advantage of this new marketplace. Websites seeking to list companies must register with the SEC and provide investors the basic information about the companies they list.
Crowdfunding companies themselves must provide basic disclosures to investors.
Bennet co-authored the CROWDFUND Act with Senators Jeff Merkley (D-OR) and Scott Brown (R-MA).