Hat Tip to Joe Wallin for noting the SEC has requested public comments as to whether and how they should revise the definition of “accredited investor.”
As I’ve previously noted, for most tech startups it’s very important that they only sell stock to accredited investors. It comes down to this: the securities laws impose a number of onerous obligations on startups whenever they sell securities to someone who is not an accredited investor. [Read more…]
Lots of people are excited by the potential for equity crowdfunding ever since the federal government passed the JOBS Act. Many new businesses are popping up to exploit the new model, and there is a lot of buzz about equity crowdfunding these days. Of course, it is still not legal yet, and won’t be until the SEC finishes writing the rules. But I still hear the same question over and over: Should my company raise capital through equity crowdfunding? Unfortunately, in the case of most startups I don’t think it makes sense. Here’s why: [Read more…]