Q&A: What Startup Entrepreneurs Need To Know About Raising Money Through Equity Crowdfunding
Last week, the Security and Exchange Commission signed off on new regulations under the JOBS Act allowing average investors to buy equity in startups on crowdfunding platforms—think Kickstarter but with actual equity for sale, not just trinkets.
To get a sense of how entrepreneurs stand to benefit from the new equity crowdfunding regulations, we sat down with Rod Turner, cofounder of Manhattan Street Capital – a growth capital marketplace looking to take advantage of the new changes by building an equity crowdfunding platform for mid-sized firms.
Karsten Strauss: The question a lot of entrepreneurs will be asking is how these regulation changes will affect them. What new tools are available?
Rod Turner: Starting January of 2016 entrepreneurs with early stage startup companies will be able to appeal to all investors to raise capital and it’s going to be quite simple to do so. It’s going to be a lot easier for startups in out-of-the-way locations, or doing relatively unusual things that are appealing nonetheless, to raise capital. It’s a revolutionary development.
There’s $16 trillion of additional investment capital available to invest in startup companies in the U.S., which is an amazing democratic development. Startups that are in venture capital backwaters of the U.S., of which there are many, will now be able to raise serious amounts of money and it’s going to be based on merit and on the skill and ability of the entrepreneur to communicate. It’s not going to be dependent on who you know or if you happen to be based in Silicon Valley or New York City and have good access to VC.