The Crowdfunding Handbook

INTRODUCTION

Since the dawn of the digital era, entrepreneurs have dreamed of being able to raise capital on the Internet.

Until 2012, they couldn’t do so legally, because federal and state securities laws in the United States prohibited businesses from raising capital using “general solicitation” and “general advertising” methods such as newspaper ads, television and radio commercials, email blasts, Internet advertising, and social media websites. To be able to issue securities in exchange for investment, entrepreneurs were required to register an initial public offering (IPO) with the federal government, a process that typically takes months and costs hundreds of thousands of dollars in legal, accounting, and other fees they can’t afford.