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Crowdfunding may get a Congressional boost

In September, President Obama included a crowdfunding exemption in his proposed jobs bill, and there is a bill in congress (HR 2930 McHenry) that proposes a very similar exemption.  It is elegant in its simplicity!
It includes  provisions that:
  1. creates a crowdfunding exemption from the federal registration requirements for offerings of up to $5 million with each investor investing a maximum of the lesser of $10,000 and ten percent of the investor’s annual income;
  2. exempts offerings done under this exemption from the 500 investor cap (this is the provision of the ’34 Securities and Exchange Act that automatically makes every company with at least 500 equity investors and $10 million in assets a public reporting company);
  3. preempts state law so that offerings done under this exemption are not subject to registration requirements at the state level.

Crowdfunding is growing in use around the world and there are businesses that are already raising loan and equity capital this way, albeit in small amounts. It is inspired by crowdsourcing, and involves the collective cooperation, attention and trust by people who network and pool their money together, usually via the Internet, in order to support efforts initiated by other people or organizations.

PLEASE NOTE: There is tons of useful stuff on Startup Owl, a site that’s been going for a dozen years. So keep browsing, but know that the founder, Will, now devotes most of his time and energy to his new website that you should definitely visit:

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