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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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