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Equity Crowdfunding for Investors: A Guide to Risks, Returns, Regulations, Funding Portals, Due Diligence, and Deal Terms by Matthew R. Nutting, David M. Freedman

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CHAPTER 7

Equity Crowdfunding Portals

How to Navigate the Websites That List Title III Offerings

Intermediaries known as funding portals and broker-dealer platforms lie at the heart of the equity crowdfunding experience. This is where issuers and investors find each other. These intermediaries provide various tools, forums, and services to facilitate compliant offerings, disclosures, communication, and transactions between issuers and investors.

In fact, under Title III of the JOBS Act of 2012, an issuer may not make an equity offering via its own website or directly to investors; it must use an intermediary's portal or platform.

Funding portals, as defined in Title III, are websites that are registered with the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) for the purpose of hosting equity crowdfunding activities: offering, disclosure, investor registration, communication, transaction, and so on.1

There are important distinctions between funding portals and broker-dealer platforms that feature Title III offerings. Funding portals are a new type of intermediary created by Title III, while broker-dealers have been established market makers for many decades. A broker-dealer can be an individual or a company.

Broker-dealer platforms are authorized to do, while funding portals (which are not owned or operated by broker-dealers) are prohibited from doing, the following: offer investment advice or recommendations to investors; solicit ...

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