Here is what I understand…

Crowd Funding is where a large(r) number of people (a crowd) invest in a collective investment (ie where the control is shared) – which is what equities are.

Now, collective investments have special rules about whether you are allow to promote them.

Some are ‘authorised’ by the national financial regulator (in the UK the FSA) and that means they can be promoted or marketed or made available by sitting on a website.

Others are not ‘authorised’ and anybody who markets or makes the web page available in a given country (eg UK) and even if they or their business is based abroad (such as British Virgin Islands) they are liable for a prison sentence if they allow the ‘unauthorised’ collective investment to be made available (ie sitting on a website is generally regarded as sufficient).

Now, there is a way around this – that is, if you check that anyone seeing the advert or promotion is a High Net Worth Individual or Sophisticated Investor – then that’s okay.

So, there is a grey area where Crowd Funders make the offer available – without any advice or explicit promotion and then only allow registered High Net Worth Individuals or Sophisticated Investors to get access to the contact details. In this way, they can claim they are not promoting it per say.

However, as per the article, http://www.ibusinessangel.com/2012/01/crowd-funding-nearly-legal/, there is a bill before the US Senate to make Crowd Funding legal – ie. clear up the grey area.

Hope this helps
Neil

ps. I am not a lawyer – but an entrepreneur – so don’t take this as the final word – there may be a specialist lawyer who would explain it better… but equally, I find lawyers often disagree about the laws here – as I say – it’s a grey area.

We seek investments of the order of £0.6 million to start marketing our systems and proceed with further clinical trials. The company has been recently awarded a substantial grant from TSB.

Please have a look at our website: http://www.cnt.uk.com

You may contact me at: thanos@cnt.uk.com

Many thanks
Dr Thanos Mitrelias

http://www.kickstarter.com/

I am keen to know. Mark

Crowd Funding is illegal as it is a collective investment under FSA rules and it is illegal to allow a collective investment to promoted in the UK (even if your product or trading office is outside – say in Isle of Man) – and can result in a criminal (or prison) sentence for the company directors who allow it to be promoted.

So, placing an advert on a website – which is viewable by UK residents – for an investment in a startup (where the investor takes a small part of the investment – shares – and has shared control) is illegal.

If you choose to invest in a friends business – that is okay – assuming that he hasn’t promoted it to unknown people (ie stuck the offer on a website or printed it out and posted it to a list of potential investors).

Hope this helps.

Br
Neil

Will it be monitored differently than other investment products by the investment regulators?

What is the current status of business angel investing ? I cannot imagine that I am prevented from investing in a friends business if I choose to do so. I guess that funds which make business angel investing easier in stranger businesses should be carefully regulated.

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Small 10,000 to 20,000 seed money capital to form “idea stage” level and joint venture with technology investors to elevate company to Seed Level. Start Up company in the video games for pc game and game console.

Project 3
Im in need of $500,000 to invest with a company restaurant investing group; owner of restaurant retail spaces.
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Project 4
Serious business partners and or investors to participate with a group of consultants and investors on a signature restaurant in San Francisco,CA and it’s surrounding cities.

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Project 5
Establish with a prominent co-founder of lyfe kitchen if possible a over haul of menu to deliver a high sales restaurant in Daly City,CA. Location is more than perfect , investment goals are very high.