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Crowdfunding and Other Recent Capital-Raising Initiatives for Startup Companies

January 25, 2012

Authors: Donna L. Brooks

In recent years, the U.S. capital markets have become less attractive to issuers with the number of initial public offerings in the United States dropping precipitously from the venture capital heydays of the 1990s (with an annual average of 530 IPOs) to 126 in 2010.  Meanwhile, the value of private company share transactions has grown to $4.6 billion in 2010 and is expected to increase to $6.9 billion for 2011.  Against this backdrop, the House of Representatives has approved a number of bills that would (1) provide a registration exemption for “crowdfunding,” (2) lift the ban on general solicitation of “accredited investors” in private placement transactions, and (3) raise the Regulation A registration exemption from $5 million to $50 million.

To view an analysis of the proposed bills and their implications, please click here.
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