Crowdfunding has been defined as “the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the internet to support efforts initiated by other people or organizations”, and has been traditionally used by charitable organizations.  Business crowdfunding sites currently include,,, and  However, prior to the JOBS Act these sites were set up solely to accept donations and offer tokens of support, like coffee from a coffee company, not sell securities.  The JOBS Act now opens the door to using the web as a distribution platform to reach potential investors.

The JOBS Act permits issuers to raise up to a maximum of $1 million from accredited or non-accredited investors in any twelve-month period through a crowdfunding portal or licensed broker dealer, with a maximum amount per investor equal to the greater of: (i) $2,000 or five percent of  annual income or net worth for investors with less than $100,000 in annual income or net worth or (ii)  ten percent of annual income or net worth for investors with $100,000 or more in annual income or net worth. In addition, the state securities commissions are not allowed to require registration of crowdfunding offerings under state blue sky laws, but can require notice filings and fees in the state that is the issuer’s principal place of business and in any state in which purchasers of 50 percent or greater of the aggregate amount of the issue reside.

Securities purchased through crowdfunding may generally not be sold for one year from the date of purchase.

On October 30, 2015 the SEC adopted final rules ot permit companies to sell securities through crowdfunding.