Wish you had invested in Apple when it was still in its garage days?
As crowdfunding jumps in popularity, a new federal rule now allows so-called unaccredited investors to put up as little as $100 for a stake in start-ups and small businesses. The SEC's rule, called Regulation Crowdfunding, will help companies raise capital while also let everyday people — and not just the wealthy — in on the action.
Previously, these sorts of investments were restricted to
It's an opportunity to get in on the ground floor, said Ron Miller, CEO and co-founder of StartEngine, an approved Title III portal that has already raised $17 million from nonaccredited investors.
But it does come at a price.
Start-up investing is the riskiest of the riskiest, said Gregg Flinn, chief investment officer at ALTZ Investment Strategies
"These are smaller companies just starting out, not the Ubers of the world, so there's a significantly higher level of risk," he said. Although the payoff can be huge, up to three-quarters fail, Flinn said.
Yet for many individuals, the opportunity for an equity stake in a start-up or small business may be irresistible. Before, options were limited to backing an idea through a crowdfunding platform like Kickstarter, which only offers a reward in return.