Five Unanswered Questions About Crowdfunding

For all the hype around small businesses raising money by selling equity stakes to individuals online, no one knows what this type of crowdfunding will actually look like. Since Congress relaxed securities laws this spring to make it easier for entrepreneurs to fund their businesses, a slew of new middlemen are trying to position themselves to benefit. The law, called the Jumpstart Our Business Startups Act (pdf), called for a new way for private companies to raise up to $1 million online from retail investors. It also eased other regulations for businesses trying to raise capital, including rolling back the ban on “general solicitation,” or publicly seeking investment in private companies.

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