The SEC today paved
the way for a new era of venture capital investing by stating it won’t pursue enforcement action against FundersClub, whose
platform lets any accredited investor fund startups in exchange for equity.
Before, some thought FundersClub’s founders could face jail time for violating
finance laws. FundersClub’s model could be used by others to raise capital
online for startups before the JOBS Act goes fully into effect.
FundersClub is a Y
Combinator-incubated startup that has raised $7
million to build its online venture capital system. Its website hosts
profiles of different startups looking to raise money.
Any accredited investor (someone who earns over $200,000 a year or
has a net worth over $1 million) can choose to invest as little as $1,000 in
startups with open rounds on FundersClub. These investors can cash out if the
startup is acquired or IPOs, or if they do a stock offering on the secondary
market, and FundersClub gets a cut of the money.
