The law permits Crowdinvestors to invest a percentage of their income or assets every year. These restrictions govern the total amount of money that any individual chooses to invest in startups. It could all go to one company, or be spread across a number of companies. Here’s how it works:
Everyone can invest at least $2,000/year.
If an investor makes less than $100,000/year or have less than $100,000 in assets, they can invest 5% of that each year. For example, if I make $80,000/year, I will be able to invest $4,000/year in startups.
If an investor makes less than $200,000/year or has less than $200,000 in assets, they can invest 10% of that each year. For example, if I make $150,000/year, I can invest $15,000/year in startups.
If an investor makes more than $200,000/year they are considered and accredited investor, and can basically invest as much as they want.
When can I start investing?
Part of the JOBS Act requires the SEC to go through a 9 month rule-making period before Crowdinvestors can start investing in startups. In the meantime we have a number of ways for you to learn about exciting companies and start to support them, but we all have to wait until January before any money can change hands.
Why is this good for Entrepreneurs?
Crowdinvesting not only opens up the right to invest in startups to everyday citizens, it also provides a compelling way to take ownership of and help the startups that you are most passionate about. Think about how 300 passionate Crowdinvestors will be able to help a startup find new users and customers, get product feedback, connect with industry experts, or carry out market research.
Wefunder supports three different federal laws that allow startups to raise money legally. To comply with the law, Wefunder Advisors LLC and Wefunder Portal LLC (both owned by Wefunder Inc) also list startups depending on the regulation used.
Legal May 16th 2016
Wefunder Portal LLC
for 314 startups
Wefunder Advisors LLC
for 105 startups
for 3 startups
Curious how well the companies have done? Or how many raised follow-on financing?
Some fine print: 1) These numbers include startups currently live on Wefunder if they pass their minimum target. 2) Some startups use two different laws at the same time (i.e., Regulation D and Regulation Crowdfunding).
Join 487,525 investors who funded 401 startups with over $143.5 million1
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