Crowd Funding…what is it?

It’s a hot topic these days, but do we really know what crowdfunding is? Let’s start with a definition: The concept originated as an online money-raising strategy that began as a way for the public to donate small amounts of money, often through social networking websites, to help artists, musicians, filmmakers and other creative people finance their projects. In 2012 President Obama passed the JOBS act which changed the rules for crowdfunding. Investors will now be allowed to receive equity in exchange for funding. This will be achieved through intermediary funding portals (websites). Up until 2012, crowdfunding sites were only allowed to operate on a donation or reward basis. In order to protect investors, the United States Congress has directed the Securities and Exchange Commission (SEC) to create rules exempting crowdfunding from the securities registration laws. How does is work in Canada? Reward and donation base crowdfunding does happen in Canada and is commonly used among charities and start-ups. This new concept is only in the United States under the JOBS act. Crowdfunding investments cannot be offered legally until the SEC adopts rules to permit them. The process is still underway with a deadline for January 2013. Now you have a better understanding of crowdfunding, so remember like all investments there are risks. Before you invest do your homework and if you have any questions please provide a comment below. Our friends at the New Brunswick Securities Commission recently gave an excellent present on the topic. For more information on crowdfunding please visit their website: http://www.nbsc-cvmnb.ca/nbsc/content.jsp?id=1392&pid=1000. Happy investing! Share & Bookmark This Story! Bookmark on Delicious StumbleUpon Google BookmarksTip’d

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