Economist Louis Kelso, creator of the ESOP, once stated, “The problem with capitalism is there are not enough capitalists”. This means that until recently, most people did not have direct access to equity, only the very rich were able to access equity from businesses. This changed on April 5 th , 2012, when the JOBS (Jumpstart Our Business Startups) Act of 2012 passed both houses of Congress. This bill allows for people to participate in “Crowd-Investing” or equity crowdfunding. This is very similar to rewards based crowdfunding except that instead of early access to a video game, or free product, investors get equity from the companies they choose. Equity crowdfunding platforms generated $2.1 billion in funding for start-ups in 2015. Moreover, the World Bank predicts that crowd-investing will be a $96 billion market by 2025 in developing countries alone.

Economist Louis Kelso, creator of the ESOP, once stated, “The problem with capitalism is there are not enough capitalists”. This means that until recently, most people did not have direct access to equity, only the very rich were able to access equity from businesses. This changed on April 5 th , 2012, when the JOBS (Jumpstart Our Business Startups) Act of 2012 passed both houses of Congress. This bill allows for people to participate in “Crowd-Investing” or equity crowdfunding. This is very similar to rewards based crowdfunding except that instead of early access to a video game, or free product, investors get equity from the companies they choose. Equity crowdfunding platforms generated $2.1 billion in funding for start-ups in 2015. Moreover, the World Bank predicts that crowd-investing will be a $96 billion market by 2025 in developing countries alone.

According to the SEC, securities sold by crowdfunding sites must be held for at least a year, unless they are sold to an accredited investor, a family member, or the securities are a part of an offering registered with the SEC. An accredited investor is an individual who makes at least $200,000 per year, $300,000 with a spouse or has a net worth of $1,000,000 (excluding primary residence) with or without a spouse. Any investor that does not fulfill either of these qualifications would be an unaccredited investor.