Title 3 Equity Crowdfunding: The History, and The Future.
You’ve heard of Kickstarter and Indiegogo by now right? Yea, those are pretty popular but you should be paying attention to companies like Republic. Times are changing, and you’ll hear more about them soon thanks to the rise of equity crowdfunding. You probably didn’t know Youngry was the first Reg CF crowdfunding offer to fund on Republic. That may even sound a bit confusing. Well let me break it down for you.
Title III allows entrepreneurs to raise up to $1 million in capital from the crowd. For the first time since 1932, startups can leverage their community of early adopters to drive growth by inviting them to invest in their company. Title III is similar to Kickstarter but instead of rewards like t shirts or products, investors actually receive equity.
Meaning you can now become an Angel investor yourself. Don’t know how to get involved in startup culture? That’s ok, now you can own a piece of a company. Pretty crazy right? What a time to be alive.
The History of Title III Crowdfunding
Way back on April 5, 2012, President Obama signed The Jumpstart Our Business Act (JOBS Act) into law. Basically, the JOBS Act birthed what is now the equity crowdfunding industry. This allows companies in the U.S. to have a greatly increased access to capital. They can now publicly advertise their capital raises (Title II.) and they can even raise capital from the (general public) crowd (Title III and Title IV).
When you think of investing, you probably know that ~2% of America’s wealth dictated who companies could raise money from. On June 19, 2015, that all dramatically changed. Three short years after the JOBS Act officially passed, Title IV (Regulation A+) of the JOBS Act went into effect. This allows larger companies to accept capital from the general public or effectively Crowdfund their company using equity. This expanded even further when Title III was enacted. In October 2015 early stage companies (Like Youngry) could begin accepting capital from the general public.
Equity Crowdfunding Broken Down
This initiative lets companies from the Seed/ Early Growth Stage to raise capital from accredited investors online. This is a great way to attract investors with specific industry networks and segmented expertise to add tremendous value.
This version of equity crowdfunding gives early stage startups the opportunity to raise up to $1 million from the crowd. Youngry successfully rocked the first version of this on Republic
This gives growth stage companies the ability to hold “miniature-IPOs.” It also allows them to raise some serious funds from the crowd. Up to $50 million can be crowdfunded and their doesn’t even have to be accreditation from investors.