If you would like to know if you are eligible to invest in startups under the Securities and Exchange Commission’s Regulation Crowdfunding here in the United States for investing in startups and small businesses, please proceed.
To develop this complete quiz, I’ve carefully reviewed Regulation Crowdfunding on the SEC’s website. I also checked with crowdfunding attorney Michelle Thimesch (and others).
Here’s the quiz:
Are you a U.S.-based adult? Yes or No.
If you answered “Yes,” you are eligible.
That’s the entire quiz. You’re done.
(OK, in the spirit of full disclosure, if you are not U.S. based, there are more questions to sort through to determine what rules may govern your investment in a U.S. company. The answer is still often “yes.” You’ll want to check with an attorney in your country.)
Michelle, who is also the CEO of Crowdfund Main Street, explained, “The U.S. does not regulate foreign investors. It is on the issuer and the investor to decide whether to accept the investment. The question is what restrictions, if any, the investor falls under in their jurisdiction of residence.”
In contrast, you have probably heard the term “accredited investor.” The definition has evolved, and inflation has eroded the limitation somewhat. Still, it essentially defines how rich you have to be to invest in deals offered under other rules that securities attorneys like to call “exemptions.”
Attorneys call the rules for issuing securities in private companies exemptions because they define the cases when you don’t have to follow the overwhelming complexity and expense of a public offering. That acronym you hear all the time, IPO, stands for initial public offering and refers to the sales of securities under the rules companies really want to avoid, if possible.
Regulation Crowdfunding, Reg C.F., is my favorite exemption. Regulation Crowdfunding allows U.S.-based adults who are not accredited investors to invest limited amounts of money in crowdfund offerings (accredited investors may invest without limits). The limit is never lower than $2,500 per year. So, if you invest $100 at a time, you can build a diverse portfolio and easily stay under the limit.
You could invest in a local vegan restaurant, a company developing carbon-neutral space launches, a solar-powered E.V., a social enterprise employing women in Afghanistan, a black-owned and led tech company providing diverse and inclusive images, wave energy generation companies, battery energy storage, and wind energy technologies at $100 each and have an interesting portfolio.
Companies like these not only have the potential to generate a profit and provide a return to investors, they hope to positively impact people or the planet—or both.
I know you can do it because I did it. Most of these investments I made with friends through the Impact Cherub Club, which, by the way, you are invited to join (for free).
If you want to learn more about investing, you can join us for SuperCrowd23 on May 10-11, 2023. We have dozens of excellent speakers on the program, including the CEOs or founders of crowdfunding portals. Ron Miller, founder of Start Engine, one of the largest portals (a registered broker-dealer,) will be on the program. We’ll also have Jonny Price from Wefunder.
Topics we’ll cover will include:
A guide to local investing
“Farewell to the Friedman Doctrine”
Crowdfunding investment clubs and best practices
Building entrepreneurial success
Evolution of alternative investments
Networking for capital
Democratizing the private market
Investment crowdfunding for nonprofits
The space economy
Strategies for using community investment funds
And so much more. With literally dozens of speakers, you’ll hear from a diverse and inclusive array of perspectives so you can learn from people in situations like yours. Whether you want to learn to be a better investor or raise money, this is genuinely a can’t-miss event.
Superpowers for Good readers get tickets at half-price! Register here.