If you’re a seasoned entrepreneur or a startup owner, you know the importance of acquiring the right funding to propel your venture forward. Crowdfunding has emerged as an incredibly valuable tool for businesses of all sizes. Today, I’d like to share some insights about a critical element in crowdfunding – securities.
What Are Securities?
In the simplest terms, when you crowdfund, you’re selling a portion of your company to the investing public, and what you’re really selling are securities.
So, what are securities? According to the Howie rule, securities exist whenever there is an interest in a joint enterprise where profits are expected to result from the efforts of others rather than yourself. In other words, you don’t physically show up to that company to work – what you’re buying or selling are securities.
Why is this important?
Understanding the nature of securities is crucial because when you’re selling securities, you need to comply with specific rules set by the Securities and Exchange Commission (SEC). The rules ensure that companies provide necessary and accurate information to potential investors and uphold a fair, orderly, and efficient market.
How Can Invown Help?
At Invown, we act as a funding portal that enables you to sell securities directly to the public, accredited or non-accredited, via Reg CF. We also support 506c and Reg A offerings on our platform. But what truly sets us apart is our capability to facilitate Reg CF investments.
Regulation Crowdfunding (Reg CF) allows eligible companies to offer and sell securities through crowdfunding. The rules enable individuals to invest in securities-based crowdfunding transactions subject to certain investment limits.
Whether you’re in the early stages of your startup journey or you’re leading an established business looking to scale, understanding the concept of securities in crowdfunding is crucial. It not only helps you comply with regulations but also enables you to communicate effectively with potential investors about what they’re buying into.
I hope this brief overview has been helpful in demystifying the concept of securities within the realm of crowdfunding. If you have any questions or need further clarification, feel free to leave a comment or reach out to us directly at Invown.
Remember, we are here to help you take that leap and fund your venture, project or enterprise. Stay tuned for more insights and tips on crowdfunding and securities in our upcoming posts.