The JOBS Act and Crowdfunding: New Investment Opportunities for the Average Joe

What comes to mind when you think about investing?

I tend to think about my 401K, my house, early retirement, funds, and maybe the occasional stock pick. That’s my world. Pretty boring. I’m sure yours is quite similar.

In the grand scheme of things boring is just fine, but what if when you thought about investing you could also imagine yourself:

  • purchasing equity in a company like Pinterest from day one, or
  • investing into a piece of commercial real estate down the street?

The reason you and I don’t envision those as real opportunities is that they aren’t. We aren’t qualified based on our net worth by the U.S. Securities and Exchange Commission to participate in such investing.

The term crowdfunding has been around for a few years now and many people are using and participating in crowdfunding for charity, creative projects, and more, in exchange for interest on debt or gifts (like a t-shirt). But crowdfunding has never involved purchasing actual equity in a new idea.

That’s all about to change.


Congress passed the JOBS Act (or Jumpstart Our Business Startups Act) last year. It’s been signed into law by the President and we are currently waiting on the SEC to fill in the blanks as to what exactly the law allows.

Among other things, the JOBS Act allows upstart businesses to fund their business idea with a small, unregistered public offering, using a number of accredited investors. From my understanding there is an exemption in the law for certain crowdfunded businesses that says they can take on investors other than the traditionally defined accredited investors, as long as those investors meet these rules:

  • They invest not more than $2,000 or 5% of their net worth or income annually, if their net worth or net income is less than $100,000
  • They can only invest $10,000 at a time not to exceed $100,000 annually if their net worth or net income is greater than $100,000.

So before the year is out, you’re likely to be able to visit one of the many crowdfunding websites like to invest money and receive equity in the next big idea.

What do you think?

I’m definitely a proponent of fewer regulations and more people being able to dine at the big boy investing table. I’m also a proponent of taking a very small portion of your investment portfolio and placing it into riskier opportunities. But I know there are very smart people who feel there are macro-economic downsides to this new law. I suggest you read some of the opinions.

On the micro-level, as with any type of investing, if you participate in crowdfunding, you’ll want to keep your investments to a minimum and, if possible, spread your crowdfunded equity across a variety of opportunities. Crowdfunding isn’t going to replace your 401K, but it will give you one more option to see your money grow faster and to be a part of the next big thing.

What do you think of crowdfunding? Do you see yourself participating in any crowdfunded investing opportunities in the future?

Sources: Jason Hull, Should You Invest in a Crowdfunded Business; Michael Lewis, What is the JOBS Act?

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Last Edited: June 26, 2017 @ 4:27 pmThe content of is for general information purposes only and does not constitute professional advice. Visitors to should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Philip Taylor

Philip Taylor, aka “PT”, is a CPA, financial writer, podcaster, FinCon Founder, husband, and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or Google+. Listen to the new podcast, Masters of Money!