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SEC to Increase Regulation Crowdfunding Limit in 2021

A Thought Leader Guest Post from Republic:

Huge news: SEC to raise Regulation Crowdfunding limit to $5M from $1.07M

Today, the Securities and Exchange Commission (also known as the SEC) made an important announcement that stands to unquestionably improve regulated startup and private investing.

Huge News SEC to raise Regulation Crowdfunding limit to to $5.0M  up almost 5xMost significantly, the SEC will increase the maximum amount that can be raised through a Regulation Crowdfunding campaign from $1.07 million in any twelve-month period to $5 million--a nearly five-fold increase. 

It will also increase the 12-month fundraising limit on Regulation A+ from $50 million to $75 million, and increase individual’s investment limits in some cases. The changes will take effect in 2021. 

Why are we so excited about these changes?

As you probably know, one of the best predictors of a company’s success is access to capital. And historically, it’s been much harder for small companies to raise capital than it has been for larger companies. (Think of how much easier it is for a giant corporation to issue hundreds of millions of dollars in stock or corporate bonds than it is for most small businesses and startups to raise a few million dollars.)

To correct some of this inequity, the JOBS Act was passed in 2016 to make it easier for private companies to raise capital directly from individual investors (legally known as Regulation Crowdfunding.) This ruling laid the foundation for the investment crowdfunding industry as we know it today. Since the passage of that law, private companies have used Regulation Crowdfunding to raise over $500 million in capital from individual investors. Companies using a slightly different exemption created by the same legislation, Regulation A+, have raised billions, including more than $1 billion in 2019 alone.

$1 million wasn’t enough

Despite the increasing popularity of crowdfunding, the $1,070,000 annual cap on Reg CF has deterred companies and projects looking to raise more than $1 million — which is most companies. Today’s announcement is such a game-changer because...

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