{"id":5154,"date":"2016-04-04T10:48:01","date_gmt":"2016-04-04T15:48:01","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/starting-a-business\/crowdfunding-and-the-jobs-act.html"},"modified":"2026-05-20T13:15:00","modified_gmt":"2026-05-20T18:15:00","slug":"crowdfunding-and-the-jobs-act","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/crowdfunding-and-the-jobs-act.html","title":{"rendered":"Crowdfunding and The JOBS Act"},"content":{"rendered":"\n
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Crowdfunding and The JOBS Act<\/h1>\n\n
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\n By Amber Sheppard, Esq.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Crowdfunding is a way to raise capital from a large group of people who each contribute small amounts. Under the JOBS Act, small businesses and entrepreneurs can engage in equity crowdfunding and issue unregistered securities to public investors.<\/p>\n\n <\/div>\n\n\n\n

In 2012, the\u00a0Jumpstart Our <\/span>Business Startups<\/span> Act<\/span> (JOBS Act<\/span>)<\/a>\u00a0triggered a series of rule changes related to capital formation<\/span>, registration, and disclosure under U.S.\u00a0<\/span>securities<\/span> law<\/span><\/a>. Among other things, the JOBS Act<\/span> provides exemptions<\/span> to security offerings<\/span> registration for crowdfunding<\/span> endeavors.<\/p>\n

This article explains the basics of crowdfunding<\/span>, SEC rules<\/span>, and exemptions<\/span> to crowdfunding<\/span> offerings<\/span> under the JOBS Act<\/span>.<\/p>\n

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What Is Crowdfunding<\/span>?<\/h2>\n

Crowdfunding<\/span><\/a>” is when large numbers of people (“a crowd”) pay relatively small amounts of money (“funding”) to a campaign. The campaigns can be for social causes or new business ventures. Crowdfunding<\/span> is now also a way to build venture capital<\/span>.<\/p>\n

In many crowdfunding<\/span> campaigns, donors get a small token of appreciation like a T-shirt or a sticker, or nothing at all. They aren\u2019t “investors” in the traditional sense.<\/p>\n

But in an\u00a0equity crowdfunding<\/span> campaign<\/a>, people buy “securities.” Before the JOBS Act<\/span>, U.S. <\/span>securities<\/span> laws<\/span> did not allow equity crowdfunding<\/span>, which, by definition, involves a public offering<\/span> to the crowd.<\/p>\n

Securities Regulation<\/span> Basics<\/h2>\n

There are two important securities laws<\/span> to be aware of:\u00a0The Securities Act of 1933<\/span><\/a>\u00a0(the “1933 Act”) and the\u00a0Securities Exchange Act<\/span> of 1934<\/a>\u00a0(the “1934 Act”). The\u00a0U.S. <\/span>Securities<\/span> and Exchange Commission<\/span> (SEC)<\/a>\u00a0regulates securities investment opportunities<\/span>.<\/p>\n

In general, securities are tradable financial assets such as:<\/p>\n