Crowdfunding bills in US Congress attempt to change securities law framework for start-ups
“Crowdfunding” was a term originally used to describe the raising of small amounts of money from large numbers of people to support charitable or artistic ventures. The concept has been adopted by entrepreneurs and business start-ups to raise capital, in the form of equity or debt, in the same way. See, for example, RocketHub in the United States.
This inevitably encounters problems with securities laws designed to protect unsophisticated investors. In the US there are bills in front of both the House of Representatives and the Senate that seek to amend US securities law to enable crowdfunding support of start-ups – as described in this article from Forbes. See also the “Startup Exemption” website that lobbies to “make crowdfunding investing legal”.
In the UK, the most prominent crowdfunding businesses are Funding Circle, which raises debt for businesses on a commercial basis, and crowdcube, which raises equity.
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