The Jumpstart Our Business Startups Act (aka- the Crowdfunding bill) is officially the law of the land, meaning startups looking for funding have new ways to raise capital.
The Crowdfunding bill will allow companies to raise small equity investments from individual investors, allowing even non-accredited investors the ability to legally invest in companies that were once only available to accredited investors.
The changes to the law have created a great deal of hype with many claiming crowdfunding to be the solution to cash-strapped startups woes. While the bill does give promising startups a new way to raise equity, it also increases the competition for investor attention.
The Due Diligence Process
In the past, most startups seed funding rounds came from friends and family or local angel groups who knew the company leadership, or at the very least, knew people in the community who could “vouch” for the founders in the vetting process…