Equity Crowdfunding for Investors: A Guide to Risks, Returns, Regulations, Funding Portals, Due Diligence, and Deal Terms

Epilogue: Trends and Innovations

Title III equity crowdfunding sits at the confluence of (1) securities laws and regulations, (2) social media, and (3) a massive influx of “new” angel investors. All three of these areas will evolve over the next decade, resulting in greater efficiencies in the equity crowdfunding process for both issuers and investors.

With respect to securities laws, the U.S. House of Representatives has already proposed rewriting Title III of the JOBS Act to raise the funding limit and make equity crowdfunding less burdensome and costly for issuers. That would, in our opinion, improve the flow of good deals into equity crowdfunding portals, including later-stage companies with traction in the marketplace. We expect that the laws and rules that govern equity crowdfunding will improve over the next several years, partly to keep pace with other countries in which equity crowdfunding (for all investors) is flourishing, but, most important, to achieve the original vision of the JOBS Act: to promote economic development and create more jobs.

With respect to social media—which supports the technical infrastructure of all kinds of crowdfunding platforms—who knows what innovations will make life easier and less risky (and probably more fun) for new angel investors. But we all know it will happen: Social media is young; it will continue to evolve rapidly. We expect, as one example, that equity crowdfunding sites will soon have the capacity to let investors “pool” their ...