With the adoption last year of the Regulation Crowdfunding (Reg CF) exemptions by the Securities and Exchange Commissionprivate companies can now raise capital from all 230 million American adults. Until now, businesses have been restricted to fundraising from only 8.5 million accredited investors — anyone who makes $200K a year individually or $300K a year jointly with a spouse, or has a net worth of $1 million.
While it’s only been four months, one thing is very clear — equity crowdfunding, under the current rules, doesn’t work. Or as some might say, the exemptions were dead upon arrival.
Let’s understand why equity crowdfunding doesn’t work.
Financial review requirement by third party CPA
Reg CF requires that businesses raising more than $500K have GAAP Standard financials prepared and ready to share. While it’s important to provide potential investors…