Legal Trends: Crowd-Funding

If your a small business owner or entrepreneur, you may have heard about a number of different crowdfunding sites, such as kickstarter.com or peerbackers.com, where a company solicits donations from the public, and typically the company gives freebies to the donors.

There are potential legal issues when raising money from strangers, in particular the Securities and Exchange Commission (S.E.C.) would like to make sure you’re not in fact issuing debt or equity, and only seeking to solicit donations.  There is currently a bill floating around in Congress to provide a crowdfunding exemption from S.E.C. registration requirements. Congressman Patrick Henry has sponsored H.R. 2930 “Entreprenuer Access to Capital Act”  which has been passed in the House and awaits a vote in the Senate.

This is a nice info-graph from venturebeat.com

INFOGRAPHIC: Drawing a Crowd: The Crowdfunding Phenomenon Heats Up