A study of the U.S. intrastate crowdfunding exemptions

The enactment of intrastate crowdfunding exemptions around the United States has built up a lot of excitement. Crowdfunding became a popular phenomenon in the past 15 years for art and design projects. Crowdfunding companies only allowed raising money by receiving donations or loans without giving funders any security interests in the project´s company. This is because any potential economic return could turn the transaction into a securities offering subject to the costly federal and state laws and regulations. Nonetheless, crowdfunding has been effective in enabling new innovations and ideas bloom. Intrastate securities crowdfunding might prove to be one of the most rewarding and game changing financial movements in the United States. It will strengthen the local economy represented by small businesses and help launch innovative new startups. However, its unique position between non-securities-based crowdfunding and private equity investments introduces complexity that must be mitigated before rewards can be harnesses. The paper analyzes this complexity by breaking it down into advantages and disadvantages. Each potential advantage and disadvantage is discussed and recommendations are made. Recommendations will be found useful for technology managers, technology entrepreneurs, organizations and agencies that plan to provide technical business services to entrepreneurs and small businesses, as well as advocates and regulators.