NextGen Crowdfunding says new rule spurred investor commitments of over $1 million (£0.69 million)

by Jonathan Adams

NextGen Crowdfunding, the Equity crowdfunding platform, said on Tuesday that investors made more than $1 million (£0.69 million) in commitments after new U.S. investment regulations took effect two weeks ago.

Crowdfunding is an alternative means of funding a project or venture by inviting contributions from a large number of people, often via the internet.

The new rules allow anyone to invest in private companies, but just three dozen startups were peddling stakes to the public on nine funding websites, news site Crowdfund Insider said at the time the rules went into force.

A new level playing field has emerged for startups and emerging businesses seeking alternative financing, NextGen founder Aubrey Chernick told Reuters in an email.

“Entry-level and non-accredited investors can now join accredited investors in supporting early stage companies,” he added.

NextGen, whose website shows it is running a handful of crowdfunding campaigns, says it pulled together information from different platforms to arrive at its estimate of investor commitments.

The U.S. Securities and Exchange Commission drafted regulations for equity crowdfunding after a law passed by the U.S. Congress four years ago that loosened rules restricting investment in private companies to “accredited investors”, generally people with a net worth of $1 million (£0.69 million) or more.

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