Equity Crowd Funding

Jobs Act & Crowd Funding

Kick Start Earth is one of the first crowd funding sites to offer Equity Crowd Funding for creators that meet the requirements of the new Jobs Act as it is finalized. This means that providing the project falls within the proper guidelines, you can now offer or receive equity shares in the company instead of rewards.

Imagine being one the first share holders of the next Facebook, Google, Amazon or even Kick Start Earth! Now these are real possibilities with the Jobs Act as it takes shape.

Kick Start Earth recognizes that this process is both new and that filing the requirements can be time consuming as companies submit their information for approval. So Kick Start Earth is the very first crowd funding site to create and offer the Rewards/Equity Voucher choice for backers of projects in which the developers are still working to meet the SEC requirements to sell equity/shares in their company but have yet to complete the process.

The Rewards/Equity Voucher choice for project backers means that the project backer can take the option of postponing receiving the offered reward in order to receive the same value in equity shares in the project company once they have met the requirements of the Jobs Act.

If the company does not meet the requirements of the Jobs act within a certain time frame as stipulated in their project campaign, the backer has the choice of receiving the reward instead of equity – or extending the Equity Voucher time limit placed on the project if it looks like the project is soon to be approved and was just delayed in the process.

If the project fails to meet the SEC requirements outright for any reason, the backer receives the reward instead of the equity shares.

You do not have to be a rocket scientist to understand the possibilities and potential that this new option offers developers for investment as well as for the backers to become true ground floor investors in what could be the next big, thing technology or company…..

SEC Adopts Rules to Facilitate Smaller Companies’ Access to Capital
New Rules Provide Investors with More Investment Choices
Washington D.C., March 25, 2015 — The Securities and Exchange Commission today adopted final rules to facilitate smaller companies’ access to capital. The new rules provide investors with more investment choices.
The new rules update and expand Regulation A, an existing exemption from registration for smaller issuers of securities. The rules are mandated by Title IV of the Jumpstart Our Business Startups (JOBS) Act.

The updated exemption will enable smaller companies to offer and sell up to $50 million of securities in a 12-month period, subject to eligibility, disclosure and reporting requirements.

“These new rules provide an effective, workable path to raising capital that also provides strong investor protections,” said SEC Chair Mary Jo White. “It is important for the Commission to continue to look for ways that our rules can facilitate capital-raising by smaller companies.”

The final rules, often referred to as Regulation A+, provide for two tiers of offerings: Tier 1, for offerings of securities of up to $20 million in a 12-month period, with not more than $6 million in offers by selling security-holders that are affiliates of the issuer; and Tier 2, for offerings of securities of up to $50 million in a 12-month period, with not more than $15 million in offers by selling security-holders that are affiliates of the issuer. Both Tiers are subject to certain basic requirements while Tier 2 offerings are also subject to additional disclosure and ongoing reporting requirements.

The final rules also provide for the preemption of state securities law registration and qualification requirements for securities offered or sold to “qualified purchasers” in Tier 2 offerings. Tier 1 offerings will be subject to federal and state registration and qualification requirements, and issuers may take advantage of the coordinated review program developed by the North American Securities Administrators Association (NASAA).

The rules will be effective 60 days after publication in the Federal Register.

What are the new exemptions mandated by the JOBS Act?

The Jumpstart Our Business Startups Act (or JOBS Act), enacted in 2012, is intended, among other things, to reduce barriers to capital formation, particularly for smaller companies. Among other things, the JOBS Act requires the SEC to adopt rules amending existing exemptions and creating new exemptions that permit companies to raise capital without SEC registration. Additional information about the JOBS Act is available here.

Eliminating the ban on general solicitation under Rule 506

The JOBS Act requires the SEC to eliminate the prohibition on the use of general solicitation and general advertising in Rule 506 of Regulation D, so long as all purchasers in the offering are accredited investors and the issuer takes reasonable steps to verify their accredited investor status. Rule 506(c) implements this statutory mandate.


The JOBS Act requires the SEC to develop new rules permitting capital raising by “crowdfunding.” Crowdfunding is a means to raise money by attracting relatively small individual contributions from a large number of people. In recent years, crowdfunding websites have proliferated to raise funds for charities, artistic endeavors and businesses. These sites did not offer securities, such as an ownership interest or share of profits in a business; rather, money was contributed in the form of donations, or in return for the product being made. The JOBS Act creates an exemption from the registration requirements of the Securities Act that provides for a form of securities crowdfunding.

Under JOBS Act crowdfunding, companies will be limited to raising $1 million in any 12-month period. Companies cannot crowdfund on their own, but will have to engage an intermediary that is registered with the SEC. These intermediaries will be subject to a number of requirements.

Individual investors will be limited in the amount they can invest by way of crowdfunding in any 12-month period to:

  • if your annual income or net worth is less than $100,000—the greater of $2,000 or 5 percent of annual income or net worth, or
  • if your annual income or net worth is more than $100,000—10 percent of annual income or net worth up to a maximum of $100,000.
    (When calculating your net worth, you should not count the value of your primary residence.)

The SEC must first write rules that govern how companies can use JOBS Act crowdfunding to raise money from investors and set out the responsibilities of intermediaries. These rules will include what must be disclosed to prospective investors before they decide to participate, as well as requirements for how intermediaries will operate. Initial guidance on crowdfunding intermediaries is available here.

Companies cannot use JOBS Act crowdfunding to raise funds from investors until the SEC adopts these rules.

Expansion of Regulation A

The JOBS Act requires the SEC to develop rules for a new exemption similar to existing Regulation A, which will permit offerings of up to $50 million a year without SEC registration (Regulation A currently has a limit of $5 million).

Like current Regulation A, the new exemption will require the filing of an offering statement that will be subject to review by SEC staff. The new exemption will also permit “testing the waters” in connection with the offering. In a change from current Regulation A, issuers will be required to file audited financial statements annually with the SEC, and may be subject to additional reporting requirements, depending on the terms and conditions the SEC ultimately imposes on the exemption.

Companies cannot use this new exemption until the SEC adopts final rules.

Do state law requirements apply in addition to federal requirements?

Yes. State governments have their own securities laws and regulations. If your company is selling securities, it must comply with both federal regulations and state securities laws and regulations in the states where securities are offered and sold (typically, the states where offerees and investors are based). A particular offering exempt under the federal securities laws is not necessarily exempt from any state laws. Each state’s securities laws have their own separate registration requirements and exemptions to registration requirements. To locate a state securities regulator and learn more about a particular state’s securities laws, you may visit the website of the North American Securities Administrators Association (NASAA).

Historically, most state legislatures have followed one of two approaches in regulating public offerings of securities, or a combination of the two approaches. Some states review the securities offerings of small businesses to determine whether companies disclose to investors all information needed to make an informed investment decision. Other states also analyze the terms of public offerings using substantive standards to determine whether the structure of the offerings are fair to investors.

To facilitate small business capital formation, NASAA, in conjunction with the American Bar Association, developed the Small Company Offering Registration or “SCOR” program. The program includes a simplified “question and answer” registration form that companies can use as the disclosure document for investors in connection with a Rule 504 offering. The SCOR program was primarily designed for state registration of small business securities offerings of up to $1 million annually conducted under the SEC’s Rule 504 of Regulation D. To assist small business securities issuers in the SCOR program, NASAA maintains a web page providinginformation on the program.

To assist small businesses seeking to undertake registration of a securities offering in several states, some states coordinate their reviews through a NASAA program called “coordinated review.” NASAA maintains a web page that provides information for companies seeking additional information on its coordinated review program.

What resources and opportunities are available through the U.S. Small Business Administration?

When assessing your capital needs, you may want to consider the programs and services offered by the U.S. Small Business Administration (SBA). Congress established the SBA in 1953 to aid, counsel, and protect the interests of the nation’s small business community. The SBA accomplishes this in part by working with intermediaries, banks, and other lending institutions to provide loans and surety bonds. Though the SBA does not provide grants to help you start a business, it does provide information on organizations and sites that can assist you in locating special purpose grants. Visit the SBA’s website and learn about financing, contracting, disaster assistance, and training opportunities to help your business succeed.

The SBA Answer Desk is a national toll-free telephone service providing information to the public on small business problems and concerns; moreover, this service provides general information about SBA programs and other programs available to assist the small business community. You can contact the SBA Answer Desk by dialing 1-800-U-ASK-SBA (1-800-827-5722) or TTY at (1-800-704) 344-6640, or by e-mailing them at answerdesk@sba.gov.

Where can I go for more information?

Help from the SEC

The SEC maintains a website with features addressing the needs of small businesses. The SEC also provides informal guidance to small businesses by answering telephone and e-mail questions.

SEC website. You can access information addressed specifically to small businesses by visiting the SEC website at www.sec.gov and clicking on “Information for—Small Businesses.” SEC forms are available through the online SEC forms list.

The SEC’s Division of Corporation Finance maintains a web page that provides tools and resources for obtaining more information on SEC rules affecting smaller companies, including staff interpretations of SEC rules and regulations.

The SEC makes available on its website a number of online publications for investors that are often useful for small businesses.

You can also submit complaints or tips about possible securities laws violations on the SEC’s questions and complaints page athttp://www.sec.gov/complaint.shtml.

Office of Small Business Policy. The Office of Small Business Policy in the SEC’s Division of Corporation Finance acts as an office of advocacy within the SEC to serve small businesses and represent their concerns within the SEC. The staff of the Office of Small Business Policy acts as the SEC’s point of contact for small business.

The Office of Small Business Policy will be glad to assist you with any questions you may have regarding the federal securities laws. You may submit a request for interpretive advice using their online form. You also may reach the office staff at:

Office of Small Business Policy
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549-3628
Telephone: (202) 551-3460

When mailing correspondence to the Office of Small Business Policy, please provide a working phone number where the office staff may reach you.

SEC Government-Business Forum on Small Business Capital Formation. The SEC sponsors the Government-Business Forum on Small Business Capital Formation. This annual gathering provides the only national forum for small businesses to let officials from the SEC and other parts of the federal government know how laws, rules and regulations impact the ability of small companies to raise capital. The SEC publishes areport on each year’s Forum.

SEC small business compliance guides. The SEC publishes small business compliance guides on new rules that may affect small businesses. You can find these guides on the small business compliance guides page of the SEC’s website.

Other useful web links, addresses, and contact information

U.S. Small Business Administration: Headquarters Office
409 Third Street, SW
Washington, DC 20416
Telephone: 1-800-U-ASK-SBA
Website: http://www.sba.gov

State securities regulators:

North American Securities Administrators Association, Inc.
750 First Street, N.E., Suite 1140
Washington, DC 20002
Telephone: (202) 737-0900
Website: http://www.nasaa.org

American Bar Association:

You can find legal help with the tools provided by the American Bar Association at


How can we improve this guide?

If you have any suggestions about how we can make this guide more useful, please contact the SEC Office of Small Business Policy at the e-mail or postal address or phone number noted above.


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