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Last week the Securities and Exchange Commission announced that it had voted on rule amendments to “harmonize, simplify, and improve” the framework for the offerings exemptions that make equity crowdfunding possible.

These exciting changes include:

  • Raising the maximum raise amount from $1.07M to $5M for Reg CF raises and from $50 to $75M for Reg A.
  • Amending the investment limits for investors in a Reg CF offering by 1) removing the investment limits for accredited investors and 2) instead using the greater of one’s annual income or net worth when calculating the investment limits for non-accredited investors.
  • Extending Reg CF’s COVID-relief measures for an additional 18 months.
  • Permitting issuers to “test-the-waters” for an exempt offer of securities prior to determining which exemption it will use, including for Reg CF offerings.
  • Permitting a new type of Special Purpose Vehicle in Reg CF offerings.

SeedInvest Co-Founder, Ryan Feit, is one of the policy advocates responsible for the initial creation of this framework, via the passage of the JOBS Act in 2012, which changed 80-year-old securities laws, democratizing access to startup capital for founders and the venture asset class to “Main Street” investors. He has outlined in a byline in Crowdfund Insider why the SEC’s recent updates are such a “major turning point” for private capital markets.

Below are some of the highlights from his commentary. These “encouraging” amendments:

  • Represent follow through from SEC Chairman Clayton on his previous statements regarding “leveling the playing field for everyday investors and fixing the legacy patchwork of securities laws”, effectively addressing many of the previous limitations to the JOBS Act.
  • Are a big step forward for entrepreneurship in America, making it easier for early-stage startups to raise capital, and therefore “will create thousands of life-changing technologies and millions of jobs over the coming years.”
  • Will result in “better investment opportunities for retail investors and ultimately help to level the playing field [for potential wealth creation].”

Read more at Crowdfund Insider.

This post was written by Tai Nicolopoulos on November 10, 2020

SeedInvest Co-Founder Explains Why SEC News Is a “Major Turning Point” for Private Capital Markets


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