Crowdcheck Blog
Insights and information for online capital formation
1. Know what you are buying
Startups can offer equity or debt, or different classes of shares with different rights. Understand what you are buying and what rights you have. In an equity investment, the investor becomes a shareholder, and owns a small part of the business. Whether the shareholder has a vote or not depends on what sort of shares the startup is offering, and you might not have any say in the company's direction. Until the company "goes public" and does an IPO, the only way to get any of your money back is through the private markets: finding an accredited investor (someone rich) to buy your shares, selling the shares back to the company (if…
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Not sure about some of the crowdfunding provisions in the JOBS Act? Well, we'll be providing a plain-language summary of the Act on this site very soon. In the meantime, a couple of the Senators most concerned with crowdfunding have made some very helpful comments that clarify, for example, that crowdfunding portals are allowed to perform due diligence services, and act as holder of record for crowdfunded investments. See Thursday's Congressional Record.
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