Advertising and SEC Concerns

Some people may question whether or not certain online advertising is simply too much. This is currently one of the questions that have been brought to the attention of the Securities and Exchange Commission, commonly referred to as the SEC, which is currently working on finalizing the regulations for allowing companies to earn revenue from investors via crowdfunding. These advertising regulations that are being set are just part of the many different issues that the SEC is currently working on addressing as a way of implementing the Jumpstart Our Business Startups Jobs Act. This particular act would help all types of startups to basically earn revenue and raise a specific amount of money with the help of investors, which is something they usually need. The startups would be selling shares to these investors on websites, which are typically referred to as funding portals, to earn a source of money.

The Jobs Act has already been signed by the President Barack Obama several months ago, during the month of April, as an attempt to help adapt to the idea of crowdfunding. A number of high-tech startups are currently anxiously awaiting the rules from the SEC so that they know what they can and cannot do when it comes to selling shares. These startups want to know what types of restrictions they may have but will not know until the regulations are set.

At this current point in time, the crowdfunding websites have limits to which types of models they can use and primarily use reward types of models, such as Kickstarter, which basically allows people to donate a certain amount of money while being able to receive a certain amount of goods. But with the new model, different companies can easily register with the SEC as a funding portal and would not have to be an official broker-dealer in order to so. The broker-dealers are already authorized to sell things to investors.

The co-founder for CircleUp, Rory Eakin, has said, “We think there’s a great opportunity to reach a wider crowd.” CircleUp is a startup that is located in the San Francisco area and currently helps to raise funds for a number of different companies via a partnership with a broker-dealer. Eakin says that the company is not waiting around for the rules and regulations to be finalized and that instead, they are looking to register as a broker-dealer.  In the meantime, the SEC is facing some important issues, which includes figuring out how funding portals will be able to specifically find and receive their investments.