Crowdfunding Microstartups: It's Time for the Securities and Exchange Commission to Approve a Small Offering Exemption
University of Pennsylvania Journal of Business Law, Vol. 13, No. 4, pp. 101-129, 2011
29 Pages Posted: 26 Aug 2011
Date Written: August, 25 2011
As social networking websites and crowd-based problem-solving initiatives gain popularity, entrepreneurs have begun to consider them as possible tools in a fundraising method, known as “crowdfunding.” Current federal and state securities regulations, however, limit the ways in which such fundraising methods can be employed by entrepreneurs and early-stage companies. This article focuses on federal securities rules and regulations and recommends changes the Securities and Exchange Commission (the “Commission”) can implement in federal securities rules and regulations to foster such funding initiatives and facilitate capital formation, while achieving its mission to protect investors from fraudulent investment practices.
Keywords: crowdfunding, microfinance, micro-startups, securities, venture capital
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