The SEC’s decision to adapt the rules in Title III of the JOBS (Jumpstart Our Business Startups) Act to embrace crowdfunding is “designed to assist smaller companies with capital formation and provide investors with additional protections”.
Until now, it was only agreed that accredited investors – generally professional, high net worth individuals – could back businesses seeking funds via the channels.
However, the update from the SEC, which continuously delayed any changes to legislation, will provide unaccredited investors the opportunity to make returns on promising firms – having.
Following the announcement, London-based equity crowdfunding platform Seedrs has revealed a commitment to the US. The company expects to make an official launch in the country in early 2016 when the changes are finalised, while a beta test with accredited American investors will be live within weeks to offer access to selected campaigns seeking investment.
Seedrs has been waiting for this moment for over a year and made the first step to conquer the US with the acquisition of California-based crowdfunding service Junction in 2014. Since then, the British firm has been looking for the right approach to comply with US laws.
Mary Jo White, SEC chair, said: “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.
“With these rules, the Commission has completed all of the major rulemaking mandated under the JOBS Act.”
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Seedrs CEO Jeff Lynn has been active in backing the JOBS Act’s crowdfunding campaign and provided testimonies to the US House Oversight & Government Reform Committee in September 2011 and the US House Financial Services Committee in May 2014.
As such, the business considers the Title III vote to be a “ significant step forward for early-stage and growth-focused businesses” that want to incorporate equity crowdfunding into operational strategies.
To date, Seedrs has funded almost 270 campaigns and raised an average of £3.5m a month. It’s this activity that has seen the likes of tennis star Andy Murray join the business.
“I have had the privilege of being involved in the lawmaking process for US crowdfunding ever since the JOBS Act was introduced in 2011, and I am very pleased to see that the SEC has finally adopted rules implementing Title III,” said Jeff Lynn, CEO, Seedrs.
“We believe this heralds the emergence of equity crowdfunding as a vibrant form of finance in the United States – just as it has become in the UK and Europe – and Seedrs is perfectly positioned to take advantage of the sector’s growth. The beta testing we are announcing today will be our first foray into the market, and we look forward to growing our presence there significantly in 2016.”