A long-anticipated regulatory change is expected in May that will allow retail investors to join in start-up funding alongside millionaires and venture capitalists.
Unaccredited investors will be allowed to put money into start-ups, letting the average investor compete alongside the Marc Andreessens of the world to back up-and-coming companies, and potentially to make enormous profits in the process.
Rohan Shah, a student at University of Pennsylvania who founded Slice Capital, is one of the entrepreneurs leading the charge. His online portal that connects companies raising early-stage capital with investors of all sizes has the potential to disrupt venture capital, he said.
"We're concentrated on unaccredited investors," he said. "We're targeting the unaccredited community, but we also have angel investors and VCs on our platform."
For years, unaccredited investors — or, the smallest investors in terms of their net worth — were allowed to participate in crowdfunding, but only for a product and not for any stock. The crowdfunding campaign that helped launch Oculus Rift in 2012 was driven not by seasoned venture capitalists but by consumers, who plowed $2.4 million into the company that year. By 2014, it had sold to Facebook for a staggering $2 billion sum — and all its earliest backers had to show for it was a virtual reality headset, instead of a massive profit.