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With crowdfunding, experts urge caution before businesses raise funds

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With crowdfunding, experts urge caution before businesses raise funds

By Lou Carlozo Wed Aug 1, 2012 1:01pm EDT

When President Obama signed the JOBS Act in April, it opened the door for entrepreneurs to fund their businesses via crowdfunding websites, a digital-age first. It also cut out lots of red tape, as the act provides crowdfunded business and investors with exemptions to the Securities Act of 1933, which prohibited anyone with a net worth below $1 million from investing in private companies. But that doesn't mean Congress and the President have given a free pass to startups that want to raise money online. Experts anticipate that once the Securities and Exchange Commission approves a new set of rules and requirements—sometime in January 2013—it's going to take lots of homework for entrepreneurs to wrap their heads around the legalities and intricacies of the crowdfunding process.

"Although this opens up investment to the general public for equity in small companies, it is still a complicated process," said Karl F. Buhl, a managing member of Navocate, a business sales and acquisitions firm based in Tampa, Florida.

Read the full article at http://www.reuters.com/article/2012/08/01/us-jobscrowdfundingidUSBRE87014U20120801?type=smallBusinessNews&utm_source=buffer&buffe r_share=c7d21

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But that doesn't mean Congress and the President have given a free pass to startups that want to raise money online. Experts anticipate that once the Securities and Exchange Commission approves a new set of rules and requirements—sometime in January 2013—it's going to take lots of homework for entrepreneurs to wrap their heads around the legalities and intricacies of the crowdfunding process.

Tags: Crowdfunding, Crowdsourcing, disbarment, Jobs Act, SEC, Securities and Exchange Commission

Posted by Tonya Van Dijk

Aug 04, 2012 11:55 am GMT Viewed 602 times

Author: Lou Carlozo Source

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