Cost of Crowdfunding: Can You Afford It?

LOS ANGELES—September 23, 2013 ushered in an era of unprecedented methods for startups to raise capital after the Securities and Exchange Commission lifted the 80-year-old ban on general solicitation. As a result of this legislation and Rule 506c of the Jumpstart Our Business Startups Act, companies can publicly advertise their security offerings to accredited investors. The JOBS Act presents entrepreneurs and fund managers with a unique opportunity for acquiring seed capital that allows them to seek alternative methods rather than pursue traditional financing or institutional investors. Although many people rejoice in crowdfunding’s massive potential, others have pointed out that this game-changing movement comes with significant costs. However, if startups leverage their available resources and seek out an in-depth understanding of the industry, the potential financial return of crowdfunding is competitive and lucrative.

Read Up on the Rules