Title III of the JOBs (Jumpstart Our Business Startups) Act, otherwise known as Equity crowdfunding is the online offering of private company securities to a group of people for investment. Because equity crowdfunding involves investment into a commercial enterprise, it is often subject to securities and financial regulation. Equity crowdfunding is also referred to as crowdinvesting, investment crowdfunding, or crowd equity. Equity crowdfunding is a mechanism that enables broad groups of investors to fund startup companies and small businesses in return for equity. Investors give money to a business and receive ownership of a small piece of that business. If the business succeeds, then its value goes up, as well as the value of a share in …show more content…
Equity crowdfunding allows individuals the opportunity to invest on a larger scale, raising 40 times more per company than any other type of crowdfunding today. This provides a middle ground between the $ average reward-based donation and the traditional five-figure minimum sum required to invest in a company. With reward-based crowdfunding, the bragging rights of those who donated at early stages grow with a company, but the reward remains the same. Conversely, equity crowdfunding allows the investor’s commitment to grow side-by-side with a startup, providing a growing revenue or profit-share. On April 5, 2012, President Obama passed the Jumpstart Our Business Startups (JOBS) Act. The initial document, also referred to as Title I of the JOBS Act, allows accredited and sophisticated investors to view investment opportunities involving startups and related projects via password-protected sites. Title II of the JOBS Act went into effect on September 23, 2013. This allows brokers and crowdfunding portals to publicly advertise the need for funding, although these investment opportunities are still limited to accredited