Have you ever wondered how you can invest in companies before they go public? I'm not talking about getting in the day before, but years before. Thanks to new legislation, anyone can invest in private companies. Beginning today, June 19, 2015, the SEC is allowing companies to do "Mini IPOs," which allows companies to raise up to $50 million, instead of the previous limit of $5 million.
Under previous regulations, only accredited investors could legally invest in private companies. To be an accredited investor, the person must have one of two criteria: earn more than $200,000 per year, or have a net worth of more than $1 million (not including their primary residence). To regulate the authenticity of the companies that want to partake in these "Mini IPOs," which are, in essence, larger-scale crowd funding initiatives, the SEC requires that a company must have at least 2 years of audited financials. The SEC reviews these records along with the company's business plan, which ensures that investors know exactly what they're buying in to. This new market also allows businesses to test the interest of their company, and can help them decide whether or not they should go public.
The major company that connects private companies with investors is SeedInvest. Pay their website a visit if you're interested in learning more about the new regulations and how their site can help you put your money to work.
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