Why crowdfunding may not live up to its billing

Description

Abstract: One provision of 2012’s JOBS Act creates an exemption from SEC registration for companies that wish to sell securities over the Internet through “crowdfunding” — a method of raising money through small contributions from large numbers of people. Some companies may be able to use crowdfunding to attract investors worldwide without an expensive, time-consuming public offering. However, it’s not yet clear whether it will become a viable alternative for attracting equity capital in practice. This article provides answers to some common questions about crowdfunding, while a sidebar looks at some other financing alternatives.