When President Obama signed the Jumpstart Our Business Startups Act in April 2012, the clock started ticking on a 270-day period for the Securities and Exchange Commission to write the regulations that would govern crowdfunding. That 270 period is over and no regulations exist. SEC Chairwoman Mary Schapiro, never a proponent of crowdfunding, quit her job at the end of 2012 after taking a very deliberate approach to formulating the rules. Three top deputies, one of whom was charged with overseeing the writing of the rules, also left. It is now generally thought that the rules will not be finished until the end of 2013 and equity crowdfunding will not start until early 2014.
Affluent Investors Only
In anticipation of the SEC promulgating regulations within the mandated timeframe, a number of equity crowdfunding websites actually went live in 2012, encouraging entrepreneurs to ready their crowdfunding campaigns. Now, several are finding creative ways to work within the current law that allows only accredited investors — those with a net worth of over $1 million or income over $200,000 for the previous two years — to fund businesses. One, CircleUp, which is focusing on the food industry, has partnered with SecondMarket, a registered trader which links accredited investors with investment opportunities via an online platform and WR Hambrecht..
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