Financial Poise
Share this...


Title III of the JOBS Act

Title III of the Jumpstart Our Business Startups (JOBS) Act of 2012 allows all investors, regardless of income or net worth, to invest in startups and growing private companies via funding portals that are registered with the Securities and Exchange Commission.

CrowdFinance 7 Steps- #3 Target suitable offerings

When you start looking for offerings to invest in, look first in the industries where you have knowledge or experience; or look for consumer products and services that you are familiar with. Later you can consider offerings in certain other industries for diversity. Make sure you understand the basics of private securities: stock, LLC shares, and convertible debt.

Title IV (Regulation A+)

Title IV of the Jumpstart Our Business Startups (JOBS) Act of 2012 expands the moribund Regulation A exemption by increasing the raise limit from $5 to $50 million. Non-accredited investors could participate in Reg A offerings before 2012, and they still can under Title IV but with certain limits.

CrowdFinance 7 Steps- #4 Select the right funding portals

Based on your preferences for industries, kinds of securities, and minimum investment, pick from a list or directory of funding portals and broker-dealer platforms that list suitable offerings. Review the intermediaries’ selection criteria and track records before registering.

Intrastate Equity CrowdFinancing

The Jumpstart Our Business Startups (JOBS) Act was signed into law in March 2012. Title III of the act, which legalized equity crowdfunding, could not launch until the SEC issued final rules for the operation of funding portals.Meanwhile, some states decided to get their own jumpstart going. Relying on the intrastate exemption from SEC registration, at least 24 states—led by Kansas and Georgia—have enacted legislation or promulgated regulations that allow unlimited numbers of non-accredited investors (everyone) to participate in small private securities offerings.

CrowdFinance 7 Steps- #5 Evaluate offerings

After you identify an offering that you feel optimistic about, review the terms of the deal that really matter—including price, equity percent, valuation, use of proceeds, liquidation preferences, conversion rights, etc.—and be sure they make sense. Then conduct due diligence, perhaps collaborating with or relying on other smart investors or a professional adviser.

Portals & Broker-Dealers

Two kinds of intermediaries may conduct Title III equity crowdfunding offerings and transactions: (1) funding portals that are not registered broker-dealers, and (2) offering platforms that are registered broker-dealers. Both kinds must be registered with the Securities and Exchange Commission (SEC).

CrowdFinance 7 Steps- #6 Commit to purchasing shares

Remind yourself once more that angel investing is risky, and private securities can be illiquid for several years. Then, if you’re sure, click on “Invest Now,” and send money to an escrow account. If the issuer meets its funding goal, the deal closes and (congratulations) you’re an owner; if not, you’ll get a refund from escrow.

What’s an Angel Investor?

Angels often provide the first round of “outside” capital—that is, outside of the founders’ employees, family, and friends (the three Fs). Angel capital may be in the form of straight debt, convertible debt, or equity

CrowdFinance 7 Steps- #7 Manage your crowdfinancing portfolio

Monitor your equity crowdfunding investments and, every 12 months, perhaps adjust your allocation and budget for the coming year. Over the years, stay alert to opportunities for an exit (acquisition or IPO), later-round investing, redemption, liquidation, or sale of shares on secondary markets.