The SEC announced modifications to Regulation Crowdfunding on November 2, 2020 that are expected to go into effect by March, 2021. Securities crowdfunding will be an even more viable option for entrepreneurs to raise capital via Regulation Crowdfunding and Regulation A+.
The key changes include:
- Companies may raise up to $5M (current maximum is $1.07M)
- The investment limits for investors are amended.
For accredited investors: investment limits are removed.
For unaccredited investors: the investment limit is the greater of their annual income or net worth. - “Test-the-waters” communications will allow issuers to solicit interest from investors prior to filing the offering documents and can help determine whether to use Reg CF or A+.
- “Demo day” communications will not be deemed general solicitation or general advertising; they will be allowed.
- Regulation A+ will allow companies to raise up to $75M (current maximum $50M).
- COVID-relief measures will be extended for an additional 18 months.
Update: New rules went into effect March 15, 2021.