Coming Soon to a Start-up Near You: Crowdfunded Capital
When small business clients learn about the barriers to sourcing capital imposed by U.S. securities laws, perhaps the most consistent theme is one of frustration. The prohibition on general solicitation of investors imposed by Rule 506 of the Securities Act of 1933, as amended (the “Securities Act”), means that unless the business has a pre-existing relationship with a potential investor, it can be difficult to make the right connection to bring in critical funding. And while other avenues to capital permit general solicitation in private offerings, they generally come at the price of lengthy, and potentially expensive, merit review by state securities administrators. Soon, this may all change.
For more information, please contact the Corporate Finance and Securities Practice Group or the Canada Practice Group at Lane Powell: