Today, the true potential of investment crowdfunding will be unleashed as the SEC’s long-awaited rule changes go into effect. Republic is celebrating the rollout of these regulatory changes with three major announcements.
Introducing The $5 Million Dollar Club
Companies are now able to raise up to $5 million dollars on Republic via Regulation Crowdfunding (previously capped at $1.07M). Increasing the cap by nearly 5x for Reg CF offerings will allow Republic to bring even more attractive opportunities to our investors in the future. The reason is simple. Despite the record-high popularity of crowdfunding, the $1.07M annual cap on Reg CF has deterred companies and projects looking to raise more than $1 million — which is most companies. We hope this change will attract additional quality issuers; while all offerings are risky, we hope bigger and more mature issuers will lead to potentially lower risk profiles of the companies and projects seeking to raise under this exemption. That means that individual investors, in turn, will have access to a larger universe of investment opportunities.
You can now view campaigns "coming soon" to Republic
One of the lesser-known but no less exciting changes is the ability for companies to “test the waters” and accept indications of interest from the investment community before their offering can start taking investment commitments. This was previously forbidden for campaigns seeking non-accredited investors, except in the case of more costly Reg A+ exemption.
In layman’s terms, what this means is that companies seeking growth capital can now efficiently gauge the market prior to embarking upon a Reg CF offering. And for investors, this will dramatically increase the number of deals that we’re able to get in front of you, as well as allow you to vote with your dollar for the offerings that you most want to see raise capital on Republic. Check out upcoming offerings here!
Increased investment limits for even more Republic investors
Something that we’ve been covering a lot lately has been the topic of accredited investors. At Republic, we believe in equitable access to investment opportunities, regardless of your wealth and insider connections. Nevertheless, in the eyes of the SEC there are still certain limitations deemed necessary to protect less experienced investors from exposure to excessive risk. Though these restrictions are ultimately still in place after the rules change, the definition of an accredited investor was recently expanded to be inclusive of qualifying criteria other than blunt measurements of wealth.
In addition to the current criteria of an individual with an annual income of more than $200,000 ($300,000 for a joint household income) or a net worth of over $1,000,000, the following criteria will also qualify an investor as accredited, giving them access to additional investment opportunities under Reg D, and giving them unlimited investment limits in Reg CF offerings.
FINRA-licensed individual in good standing with Series 7, 82 or 65
Knowledgeable employee (usually an officer or director) of the issuer
SEC-or state-registered investment adviser or exempt reporting advisers
Family office with at least $5 million in assets under management or their “family clients"
And what about those that don’t qualify for these unlimited investment limits?
The good news is that most non-accredited investors can now invest more than ever in any Reg CF campaign within a 12-month period. How much exactly? Well, the answer is not as simple as we’d prefer, so we made it simple for you to log in and update your limits on Republic.
Viewed together, these substantive expansions of Regulation Crowdfunding and Reg A+ amount to what we view as a brand new chapter in the Republic story. Thanks to the tireless work of our innovative legal team, who advocated on Capitol Hill for years to effect this change, Republic is now better positioned than ever to bring profit to the people.
Interested in learning more? Join us tomorrow at 5pm EST for our special presentation, SEC rule change - What it means to investors.