Crowdfunding rules for smaller investors foil firms | 2016-08-20 | Indianapolis Business Journal | IBJ.com


AAEAAQAAAAAAAAX9AAAAJGM1ZjkxN2FmLTQ5NzUtNDU4NS04OGZkLTE1OTEwZmVhZDc3MQNew federal rules designed to make it easier for small investors to use crowdfunding have hardly gotten traction in Indiana, and crowdfunding platform operators locally are mostly using old rules to help companies raise money. Last fall, the Securities and Exchange Commission adopted Title III equity crowdfunding rules, which allowed companies to raise capital online from non-traditional investors—to the tune of as little as a few hundred dollars each. Blackett Those rules—widely known as “Regulation Crowdfunding”—took effect this May, but two of the few Indiana firms that run crowdfunding websites said the new rules come with so much regulation that it hasn’t been worth their while to put them to use. “We took a look at them and there’s still, from our perspective, a lot of dust to settle,” said Jacob Blackett, CEO of Indianapolis-based real estate crowdfunding platform Holdfolio LLC. “From a legal cost standpoint, I think it’s prohibitive, especially right now.” Brandon Smith, CEO of Indianapolis-based Localstake LLC, said his firm has been helping companies raise money under so-called securities law “exemptions” that predate Regulation Crowdfunding, because the older mechanisms are less stringent. Smith “There are other exemptions that have historically been available that have fewer requirements in terms of federal filings,” said Smith, whose firm has been helping manufacturing, technology and food-and-beverage companies raise five- and six-figure sums since 2013. “So it’s just easier to put together a deal for a business using those laws.”

Source: Crowdfunding rules for smaller investors foil firms | 2016-08-20 | Indianapolis Business Journal | IBJ.com

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