What to know about Title III?

With the passing of the Title III of the JOBS Act on May 16th, the rules and regulations regarding equity crowdfunding are undergoing a momentous shift.

Here’s a quick summary on what Title III entails:

Entrepreneurs

  • A company can raise a maximum aggregate amount of $1 Million through crowdfunding offerings in a 12 month period
  • Offerings must be made via Broker-Dealer or Portal Intermediary
  • Companies must provide detailed disclosure of corporate and financial information
    • Less than $100K – sign off from company officer
    • $100K – $500K – reviewed by public accountants
    • $500K+ – first-time fundraisers must be reviewed by public accountant, others must submit a full audit

Non-Accredited Investors

  • Investors making less than $100,000 per year can invest the greater of $2,000 or 5% of their annual income
  • Investors making greater than $100,000 per year can invest up to 10% of their annual income

Is Crowdfunder opening up its platform to non-accredited investors?
Will Crowdfunder become a Portal or Broker-Dealer and allow Title III deals?
Why isn’t Crowdfunder supporting Title III deals?
Will Crowdfunder potentially allow Title III deals some time in the future?
Where can I learn more about Title III?


Is Crowdfunder opening up its platform to non-accredited investors?

Non-accredited investors will not be able to invest into deals on Crowdfunder because we will not be supporting Title III fundraises at this time.


Will Crowdfunder become a Portal or Broker-Dealer and allow Title III deals?

Crowdfunder is not yet a Portal or a Broker-Dealer, thus, will not support Title III deals at this time. This may change as adoption increases or the regulations become less burdensome.


Why isn’t Crowdfunder supporting Title III deals?

The majority of investor and VC-backed startups are holding off on this fundraising exemption for now, and here’s why:

  • The path for fundraising quickly and efficiently with angels, VCs, and individual accredited investors under Title II online is much more efficient for startups
  • There are significant reporting and compliance overhead costs
  • A Title III raise will cost roughly $50,000 – $100,000
  • Limited raise of $1 Million in a 12 month period

Due to these significant barriers for startups, we are electing to not support Title III raises at this time.


Will Crowdfunder potentially allow Title III deals some time in the future?

Yes, we will keep a close eye on the adoption and reaction to Title III fundraises and potentially open up Title III fundraising when the timing is appropriate. Interested in a Title III fundraise? Let us know (support@crowdfunder.com) and we’ll keep you updated as Title III progresses.


Where can I learn more about Title III?

Learn more on the SEC’s website.