As many readers may know, “crowdfunding” is a modern innovation for raising money. Typically using internet sites like Indiegogo, Kickstarter, or GoFundMe, a person can set up a website to raise money to develop a product or initiate some kind of project. Projects funded through crowdfunding range the gamut from feature films to video games to new styles of clothing. Virtually any project can be funded through crowdfunding. In return, “investors” will get some small benefit, like early access to the feature film.
As of this week, new SEC regulations have been put in place to allow the sale of securities in small business through crowdfunding. This securities crowdfunding will be overseen and regulated by FINRA.
According to FINRA, anyone can invest in crowdfunded securities, but the amount one can invest depends on an individual’s income and net worth. For instance, if your annual income or your net worth is less than $100,000, then you can invest a maximum of $2,000, or 5% of either your income or net worth (whichever is greater). If, however, your annual income and your net worth are both over $100,000, then you can invest up to 10% of your annual income or net worth (whichever is greater). The total amount invested in crowdfunded securities can never exceed $100,000.