The Indiegogo equity crowdfunding launch follows on from new industry regulations that were effective from May.
The Securities and Exchange Commission (SEC) approved a revamp of the JOBS Act (Jumpstart Our Business Startups) to allow anyone to invest in companies online – something only high net worth individuals previously had the power to do.
In November last year, UK crowdfunding business Seedrs announced it would commit to the US once the SEC updated the JOBS Act.
“There is a great deal of enthusiasm in the marketplace for crowdfunding, and I believe these rules and proposed amendments provide smaller companies with innovative ways to raise capital and give investors the protections they need,” said SEC Chair, Mary Jo White, at the time.
The arrival of Indiegogo equity crowdfunding is particularly significant as it transforms the firm’s business model, which had revolved around consumers funding ideas in exchange for rewards, rather than shares.
This was achieved in joint partnership with MicroVentures, an equity crowdfunding service that has processed some $100m of investment in over 200 deals since 2010.
Any companies that embrace the new Indiegogo equity crowdfunding channel will have regulatory processes managed automatically, as an online questionnaire automates legal preparations.[rb_inline_related]
“Our mission has always been to make it easier for individuals to raise money for projects they are passionate about and this is the latest way we’re helping entrepreneurs access the financing they need while also giving backers the chance to invest in new companies,” said David Mandelbrot, CEO of Indiegogo.
“Since Indiegogo first launched we’ve wanted to offer these sort of investments, and we’re very excited to be officially giving the millions of people who visit our platform every month the chance to get involved with equity crowdfunding opportunities.”
Indiegogo equity crowdfunding comes with the strength of the company’s existing achievements, which include helping to raise more than $1bn from eight million consumers across 700,000 reward-based campaigns.
As it stands, the company has 15m monthly visitors and expects that Indiegogo equity crowdfunding will make it “well-positioned to rapidly expand the market”.
Bill Clark, CEO of MicroVentures, added: “When we started MicroVentures in 2009, the idea was to let everyone invest. At the time, the regulations were too stringent so we focused on providing venture capital access to accredited investors at fractions of the investment minimums previously required.
“We pride ourselves in our rigorous investment screening process and institutional quality due diligence. We are excited to partner with Indiegogo to bring that same level of due diligence and support to all investors.”