The Securities and Exchange Commission is still drafting its rules for crowdfunding—a provision in last year’s Jumpstart Our Business Startups Act that allows private companies to raise capital by lining up large numbers of small investors.
That delay is good news for the founders of LocalStake, an Indianapolis-based Web startup that is using an exemption in existing securities laws to arrange private offerings while others wait on the guidelines. (Read my July story here.)
“It keeps competition further away,” said Kevin Hitchen, who launched the company last year with partners Ryan Flynn and Brandon Smith.
Donation-based crowdfunding has exploded in recent years as sites like Kickstarter allow users to support creative projects with small gifts. Adding equity to the equation adds layers of complication that LocalStake aims to unravel.