This is truly the dawn of a new era for startups. Increased access to capital for startups may be just the catalyst to jump start the economy once again. Opportunities that increase more capital access invariably creates more stimulation, excitement and optimism in general. This is an amazing opportunity for new investors and startups to capitalize. For startups that have struggled to raise money in the past, now is the ideal opportunity. It seems the era of crowdfunding in general has ushered in a new age where all the old rules are being systematically phased out and a template for new rules begin anew.

Tier 1 – requires SEC and state blue sky reviews & fees, raise up to $20M per year, open to unaccredited investors, no audit required
Tier 2 – requires SEC review but no state blue-sky review (“preemption”), raise up to $50M per year, also open to unaccredited investors (limited to the greater of 10% of income or net worth), annual audit required, must use a registered transfer agent (FundAmerica will be helping to simplify this for issuers)
Both – are open to unaccredited investors, can be used by startups as well as existing businesses, and are exempt from 12(g) registration thresholds

Regulation A+ broadens the definition of “qualified investors” to include non-accredited investors, though there are clear caps on how much they can invest. Non-accredited investors can invest a maximum 10% of their income/net worth per year, protecting these often less experiences investors and making it so that they can’t “lose it all” with a single crowdfunded investment.

Once the rules become actionable in approximately sixty days, entrepreneurs will have the ability to begin a fundraising venture – seeking funds from “the crowd.” Prior to these modifications to regulations, only qualified / accredited investors could invest. Accredited investors are individuals who earn more than $200,000 per year or have a net worth of over $1,000,000, or entities with over $5M in assets.

This ideal opportunity as prior restrictions and safeguards are removed is just the boost that all startups require. During the recovery after recession, startups have struggled to raise startup capital the same traditional ways as before since the entire equity industry transformed over past seven years.