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I'm a fan of the JOBS Act but doesn't the existence of Kickstarter imply that your scenario was already legal?

From my understanding, pre JOBS act, you could not use something like kickstarter to sell equity in your company (especially bc investor accreditation issues.) Kickstarter has been used for preorders/donations.

Post JOBS act, I believe a tool like kickstarter could be used to sell micro portions of equity in a company.

Kickstarter specifically excludes businesses, leaning towards projects only. I don't think they specifically preclude offering equity, however.

IndieGoGo, one of the big competitors to Kickstarter, is a better example. It actually has a category for Small Businesses and doesn't limit what kinds of projects are allowed on the site like Kickstarter does. They do, however, explicitly disallow offering equity as a contribution reward because of the very issue the JOBS act is about. From their FAQ:

"What violates our terms? - Offering any monetary return on investment or real property, including: real estate, annuities, lottery contracts, profit-sharing, cash, securities, equity or debt-repayment"

The site actually had some excited-sounding announcement about the JOBS act recently, but I can't seem to find it.

Just to clarify.

Taken from http://www.kickstarter.com/help/faq/kickstarter%20basics#Doe...

"Does Kickstarter take some percentage of ownership or intellectual property of things made through Kickstarter?

Absolutely not. Project creators keep 100% ownership of their work."

If I'm not mistaken in this context I'm pretty sure "percentage of ownership" is synonymous with equity. At least the way equity as a word is being used in the context of this conversation.

Edit: Clarification

Among their list of prohibited items is "Financial incentives (ownership, share of profits, repayment/loans, etc)".

I suspect existing law forbids them from selling equity.

Kickstarter offers no recourse to participants. Whatever equity is, it is not a no recourse payment.

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