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Fresh crowdfunding rules give you a bigger stake in startups

Engadget Engadget 16/05/2016 Jon Fingas
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If you've ever wanted to support a young company beyond pledging money toward its products, it's time to act. After years of waiting, the US has enacted new rules that make it much easier to crowdfund a company through investments. Before, you had to be an accredited investor with some wealth (making over $200,000 per year, or a net worth of over $1 million) to contribute significant money and get a stake. Now, anyone can invest $2,000 or more online and get a say. Companies can't raise more than $1 million per year through this method, but that could frequently be enough to get the ball rolling.

There are worries about the rules. Even with the funding cap, there's a concern that fraudsters will prey on rookie investors willing to spend big without investigating a company's prospects. And the likelihood of a crowdfunded company becoming the next big thing is rather small -- a truly hot startup probably won't need this, since it can usually raise capital the old-fashioned way. Still, the new rules could make all the difference for up-and-comers that missed out on professional investments, want to involve their communities or just need a little nudge to make their dreams come true.

New York Times

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