The JOBS Act of 2012 was passed by the U.S. Congress to make crowdfunding businesses possible and legal.
Previously, there were well-established laws making it very hard, expensive, or illegal to sell stock in startup companies. Upon seeing the success of platforms like Kickstarter, legislators decided to make it easier.
In 2015, the SEC (or Securities and Exchange Commission) issued regulations putting the law into practice. Regulation A (sometimes called Reg. A+) is what made it truly practical and easy for startups to raise money in every state. More specifically, the part of that regulation is Title IV. Within Title IV, Tier 2 stands out as exciting.
Why is it exciting?
- Unaccredited investors can participate within very reasonable limits.
- The company raising capital can offer its stock to people in all 50 states.
- Annual reporting and transparency is required, but reasonable.
- The shares of stock that an investor receives are tradeable (or unrestricted).
- Offerings are exempt from state Blue Sky Laws (basically, much less regulation and cost).