The Securities and Exchange Commission (SEC) is officially your new best friend.
This week, the agency officially enacted a series of amendments that are the biggest changes to the crowdfunding space since the JOBS Act launched in 2012.
These changes have been in development for quite some time, and they’re about to make it easier for you to invest… open up an entirely new (and better) class of startups… and make crowdfunding less risky for startups across the board.
I can’t emphasize enough how big this is, angels. That’s why today, I want to translate some of the complicated regulatory language and make these changes a bit easier to unpack.
Because we’ve officially entered the very best era on record to be a startup investor… and I can’t wait to have you on board to learn how to take advantage of it all.
Here’s exactly what you need to know:
Regulation Update #1: The SEC has expanded investment limits for Regulation Crowdfunding (CF) offerings.
What this means for you: You can invest more money into startup companies this year.
If you’ve tried to invest in a startup over the last few years, you’ve likely come across some limitations. You see, if you’re not accredited, you can’t invest more than 10% of your net worth or income… whichever is lower.
But this week, that’s changing. Those limitation caps have officially expanded.
The newest SEC revisions mean that you could now invest up to 5% of your annual income. (Of course, there are exceptions… but this is true for the most part.)
Even better, if your annual income and net worth are both greater than $107,000, that 5% grows to 10% for you.
Bottom line – all of this means you have more control over your own investment assets and where your money goes. Who doesn’t love that?
Regulation Update #2: Companies can now raise up to $5 million in a Regulation CF offering.
What this means for you: You’re about to see an entirely new and more mature class of startup investing opportunities.
Until this week, startups could only raise up to $1.07 million in a Reg. CF offering. That’s a solid amount of money for a certain stage of startup, but often, $1 million just doesn’t cut it for what a startup company needs to accomplish over the course of a year.
So, for more mature startups with more capital-intensive needs, raising money from the crowd just wasn’t an option.
But now, startups can officially raise up to $5 million in their Reg. CF offerings.
That’s a massive increase, and it means you’re likely going to see even more startups turn to the crowd (investors like you) to fund their ventures.
And I’m not just talking seed stage companies.
Now that the cap has expanded, you’re about to see more mature startups (startups with more traction) raise money from everyday investors like you. You’ll likely have access to companies that, until very recently, only turned to institutional angel investors and VCs to raise their capital. That’s a big deal!
Regulation Update #3: Startups are allowed to “test the waters” before launching a Reg. CF offering.
What this means for you: Your startup opportunities will be even more confident in the future success of their business.
You’ve heard me say it before. Just like any kind of investing, startup investing comes with risks.
Anything that mitigates that risk is a good deal in my books.
Until now, startup companies weren’t allowed to advertise upcoming Reg. CF raises. This is also known as “testing the waters.”
By that, I mean they couldn’t say a single word about it. No one could know it’s happening.
That’s risky. Without a platform to test the waters, startup companies can’t figure out just how well their raise might do before launch. If the startup launches their campaign, and it falls flat, that’s a massive waste of time, energy, and money.
For you, that means you’ll see a wave of startups joining the crowdfunding scene that have already tested the waters. That means these startups can be even more confident that their raise will perform well and that they’ll make enough money to keep their business going… all without wasting their precious resources to make it happen.
And while startup investing will always come with risks, this new regulation will take some of the “guessing game” out of the picture while you’re trying to make an investment decision.
These are three major updates that will transform the startup investing world for good…
And I expect to see plenty of incredible opportunities come out of the woodwork through the rest of 2021 and beyond. Over at the Angels & Entrepreneurs Network, we’re excited to keep sourcing some of the best ones out there.
If you want to kick your own deal flow up a notch, you can tap straight into this deal flow by joining us. You’ll get access to two fully researched recommendations every single month, plus tons of exclusive content and a network over 90,000 subscribers strong (and growing fast!).
And stay tuned… The SEC enacted a couple of more exciting amendments that I want to cover this week, too.
We’ve never really discussed them here before, so I want to give them their own space.
So, keep an eye on your inbox. I’ll be back soon with those updates.
Until next time,