Can US-Based Equity Crowdfunding Platforms Accept Foreign Money?
If you’re a foreign-based investor, but interested in investing in companies raising on US-based equity crowdfund platforms, can you invest? Although some platforms accept money from foreign investors, the answer to whether foreign investors can and should invest is more nuanced.
In the US, there are three securities exemptions where you can publicly solicit investments online: Reg D 506(c), Reg A+, and Reg CF. There are different rules with each exception and each platform has different rules around accepting international investors. The short answer is that it depends on whether or not foreign investors can invest in US-based equity raises. US-based platforms must comply with US securities regulations and regulators (SEC and FINRA) as well as foreign securities laws relating to any investor outside the US. Platforms must comply in every jurisdiction in which they want to accept funds. For the platforms that do accept foreign investors, foreign investors should be cautious of whether they should pour money into US-based raises because of the questions around legality and regulation.
Despite the progress made in the past decade around equity crowdfunding, the US still operates on archaic laws that haven’t caught up with the fast-moving pace of today’s world.
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About: Francis Vu
An investment professional with a background in private equity and venture capital having spent time conducting investments at VU Venture Partners and Pacific Oak LLC with a finance and management degree from Tulane University.