If you've ever wanted to buy a piece of a private business that holds golden promise, or sell off some of yours, your wish may be getting closer. The equity crowdfunding bandwagon is rolling. Slowly. And only state-by-state. New Jersey recently became the latest to approve legislation designed to give start-ups and emerging small business owners more access to private capital through the investing public.
Equity crowdfunding allows businesses to sell a portion of their business on the Internet, however, the Security and Exchange Commission (SEC) has stringent rules that require investors to be accredited, meaning they must have a net worth of more than $1 million or annual income greater than $200,000 in the last two years.
Since the business world has been waiting for rules that will allow them to sell equity in their business to the general public, New Jersey (and other states) are jumping ahead of Title III of the Jobs Act, which was signed into law nearly three years ago, to allow residents to solicit up to $1 million in private investment from unaccredited investors. Think of it as an online version of Shark Tank (the venture capital TV show), but everybody can play.