Federal Rule Changes Impacting Equity Crowdfunding and Social Media Use Go Into Effect Today

April 20, 2017

For entrepreneurs in states that permit state equity crowdfunding, effective today, a change in federal rules will allow those states to allow entrepreneurs to use social media to solicit out of state residents to raise money for their business ventures. This article posted on LancasterOnline describes the impact of the law change on businesses raising money pursuant to state crowdfunding laws: Law change could boost little-used state crowdfunding laws.

Previously, social media solicitation was prohibited. The revised rules are 17 CFR Sections 230.147 and 230.147A and can be found at the Securities and Exchange Commission’s website.

Pennsylvania does not currently have a state crowdfunding law, but Pennsylvania residents and businesses could be impacted by this change if they are solicited by out of state companies raising capital for their ventures. Since May 2016, Pennsylvania businesses may utilize federal crowdfunding laws to offer equity in their companies.

Here are a few helpful resources to get started on learning about crowdfunding either as an investor or an entrepreneur:

Choosing the best way to raise capital for a new or expanding business is best determined on a case by case basis with the help of experienced professionals. Consider contacting an experienced attorney to help you decide the best path forward to fundraise for your business.

Matt Landis is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University and regularly advises business owners and entrepreneurs on day to day operations and long-term planning.