Crowdfunding is a method of raising funds for a project, cause, or venture by connecting to a large number of individuals who share the same interest (the “Crowd”) and contribute (“Funding”) to the project’s success.

A crowdfunding campaign typically involves three parties: the project creator who launches the campaign, the backers who pledge money to fund it, and a platform that hosts the fundraising campaign. The platform can be either an equity-based site like EquityDoor, which lets people invest in projects they believe in, or a reward-based site that gives people perks for funding ideas.

Equity crowdfunding is the next evolution of financing an entrepreneurial venture. It’s a new way to finance your project without going through traditional financial institutions.

At EquityDoor, we help build equity to get your project started.

Regulation Crowdfunding or Reg CF is a means for startups to raise funding from the general public. Reg CF was created by Title III of the JOBS Act that allows companies to raise money by soliciting investments from groups of people.

Under the SEC’s new rules, companies can now raise up to $5 million under Reg CF over the course of 12 months. The new regulations allow non-accredited investors to contribute up to $2,200 or $107,000 per year depending on the individual’s net worth. The company must file detailed disclosures with the SEC and provide audited financial statements to potential investors.

Rule 506(c) of Regulation D is a type of exemption that allows issuers to raise capital and broadly solicit and generally advertise an offering, provided that:

1. All purchasers in the offering are accredited investors.
2. The issuer takes reasonable steps to verify purchasers’ accredited investor status and certain other conditions.

Regulation A is an exemption from registration for public offerings. Regulation A has two offering tiers: Tier 1, for offerings of up to $20 million in a 12-month period; and Tier 2, for offerings of up to $75 million in a 12-month period. For offerings of up to $20 million, companies can elect to proceed under the requirements for either Tier 1 or Tier 2.

These offerings are known as “Mini IPOs,” and they allow companies to raise capital from both accredited and non-accredited investors (subject to some limitations) without having to go through the full IPO process. This means that companies can avoid the cost and time associated with having to file with the SEC, as well as other regulatory requirements, in order to get their business off the ground.