Crowdfunding

Definition:

A method of raising capital, particularly popular among technology and start-up companies, whereby relatively small amounts of money are raised through electronic means (i.e., via the web or social media) from a large number of investors with each usually investing relatively small amounts.

In the United States, Crowdfunding is regulated by the SEC via the Jumpstart Our Business Startups Act 2012 (commonly known as the JOBS Act). In the United Kingdom, the Financial Conduct Authority (FCA) has released statements and recommendations on Crowdfunding. In October 2013, the FCA published a Consultation Paper entitled “The FCA’s Regulatory Approach to Crowdfunding (and Similar Activities),” which sets forth regulatory considerations, as well as proposals relating to loan-based Crowdfunding and investment-based Crowdfunding.

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