The Securities and Exchange Commission, which governs investing and trading stocks, is proposing an update that will enable crowdfunders to more easily sell shares in their companies.
Currently, entrepreneurs starting a company can crowdfund, but only by offering products or services in exchange for contributions. That’s due to an SEC rule that forbids the marketing of “private securities,” Econ 101 for shares that do not trade on a public exchange, such as the NASDAQ or NYSE.
The SEC is proposing to amend that rule, which will allow sites like Fundable to publicly offer and solicit the sale of actual shares in companies in exchange for investments. That’s in recognition of President Obama’s JOBS act of 2011, which was intended to open up investment opportunities for startups.