The SEC’s Office of Investor Education and Advocacy has issued an Investor Bulletin to educate investors about a new investing opportunity in the form of securities-based crowdfunding.
Crowdfunding generally refers to a financing method in which money is raised through soliciting relatively small individual investments or contributions from a large number of people. Over the last few years, crowdfunding websites in the United States have proven a popular way by which to solicit charitable donations and to raise funds for artistic endeavours like films and music recordings.
Under recently adopted rules, the general public will have the opportunity to participate in the early capital raising activities of start-up and early-stage companies and businesses.
Starting May 16, 2016, companies can use crowdfunding to offer and sell securities to the investing public.
The full SEC statement can be found here.