In our practice we carefully follow the regulatory changes that impact our business clients. Over the last several years we have been watching the evolution of crowdfunding, and its potential impact the ability of businesses in Mississippi to access needed capital. Historically, small and mid sized businesses have not had access to traditional equity funding sources. This is largely because of the fact that the regulatory process for accessing equity funding is expensive, time consuming and excludes a substantial number of potential investors.
Well on Wednesday, the SEC announced the approval of much anticipated new rules which open the door for smaller and mid sized companies to better access equity funding. This is through what is known as Regulation A offerings. With a Reg A offering, companies trying to raise up to $50 million will be subject to a simpler SEC registration process. By a unanimous vote, the SEC has also changed the rule that only “accredited investors” could invest in start-ups. An “accredited investor” is someone who has at least $200,000.00 a year in income or a net worth of over one million dollars.
This action by the SEC is just another exciting step in the ongoing process of making crowdfunding available to genuine start-ups. The more than 400 pages of new rules will become effective in approximately 60 days. We look forward to working with Mississippi businesses to take advantage of the resulting opportunities.