Crowdfunding has come to the rescue for hundreds of thousands of startups looking for capital in a tight credit market.
Soon, a new dimension to online fundraising, known as equity crowdfunding, will be available to investors, and that has regulators and consumer advocates on edge.
Regulations to be released by the Securities and Exchange Commission (SEC) sometime this year could open the door to swindlers and expose naive investors to the complicated world of securities, said Keith Woodwell, Utah Division of Securities director.
“We’re worried about fraud,” Woodwell said. “Investing in startups is the most risky type of investment there is. The problem we fear is that there will be a lot of unscrupulous companies out there playing it up to individuals.”