Venture capital is a rarefied business with enormous risks and — potentially — enormous rewards.
But now, you don't have to be a wealthy venture capitalist to get in on the game. This week, the Securities and Exchange Commission activated new rules that make it possible for people earning less than $200,000 a year able to invest in startups. It essentially democratizes venture capital. But, is that a good thing?
- "The Securities and Exchange Commission has ushered in a new era of small-investor equity crowdfunding under Title III of the JOBS (Jump-Start Our Business Start-Ups) Act. It allows ordinary investors, subject to various regulatory restrictions, to purchase equity shares in small businesses that publicize their investment opportunities on new crowdfunding platforms, such as NextSeed, FlashFunders, SeedInvest and Wefunder. The companies started advertising their new ideas on those crowdfunding platforms Monday."
- "Despite the headlines, some people think the new SEC investing rules may do more harm than good."
- "Investing in startups is no longer limited to the wealthy in the U.S. The New York Times reports, 'Starting Monday, new rules will permit anyone, not just the moneyed, to risk $2,000 a year or more investing in small companies in exchange for a stake in the business. Companies can raise up to $1 million a year this way.'"
This segment aired on May 17, 2016.