Fancy benefitting off the next Facebook or Amazon when it’s still young?
Now you can.
U.S. law previously prohibited unaccredited investors—those earning less than $200,000 a year with a net worth below $1 million—from investing in private companies in exchange for equity. Such investors could only fund startup projects via platforms such as Kickstarter or Indiegogo in return for a discount or the product itself. But now, just about anyone can spend over $2,000 backing a non-public company in return for equity.
Thanks to new rules set by Title III of the JOBS Act, startups are allowed tor raise up to $1 million in a 12-month period through this kind of crowdfunding. Private companies are required to issue financial statements to potential investors.
“For the first time, ordinary Americans will be able to go online and invest in entrepreneurs that they believe in,” President Barack Obama said when he first signed the bill into law three years ago, the Times reported.
Granted, the new rules do set some limitations. For example, investors with an net worth or income below $100,000 can invest either $2,000 or 5% of their annual income or net worth—whichever is lower.
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