Beginning Monday, May 16, entrepreneurs will have a new opportunity to raise capital when the SEC’s new crowdfunding regulations become effective and expand the pool of individuals who are able to invest in startups. Ellen Grady, a member of Cozen O’Connor’s Corporate practice group, discusses these new SEC crowdfunding regulations in Fox News and Entrepreneur articles. According to Ellen, the companies “most likely to be successful raising capital using equity crowdfunding are companies that already have a business with a community following.” “Examples might include an online retail business that has loyal customers but needs capital to open a ‘brick-and-mortar’ location, or a local bakery that wants to open a second location. These types of businesses have a ‘crowd’ that may be interested in supporting their business expansion,” Ellen explains. However, startups need more than popularity to benefit from the new regulations. Businesses that will be successful in raising capital using equity crowdfunding will need to be able to generate the required disclosure and financial information to be provided to investors.
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