As part of the Jumpstart our Business Start-ups Act passed last year, startups can now raise up to $1,000,000 through the internet.
There are some provisions.
“The new law does include safeguards. There is the $1 million limit on how much entrepreneurs can raise each year, and they can take money only from so-called accredited investors: people with a personal net worth of more than $1 million or who make more than $200,000 in annual income. Eventually, however, another revision is expected to be approved that will lower the restrictions around the definition of an accredited investor, meaning more of the public will have a chance of investing their own money into companies that they believe could be as big and successful as Facebook or Twitter. ”
Some worry about potential problems.
“tech investors like Fred Wilson and Rick Webb, are less optimistic. They warn that by deregulating the raising of equity investment — at least in part — the legislation has the potential to unleash a cascade of abuses by luring investors to what may be risky and untenable business ventures.”
Some see it as a huge game changer.
Slava Rubin, the chief executive of Indiegogo, which lets musicians, artists, and techies take donations to finance one-of-a-kind projects, said the new law could unlock a whole new wave of business.
“You eliminate the gatekeepers and the crowd gets to decide what gets funded,” he said.
People like the Dipaola brothers, who have waited for more than a year for the revisions contained in the law to go into effect, are thrilled. They say the law represents a new era of entrepreneurship in the United States”