How exactly is this bill different from just normal contract law? Is it not already super common for small businesses to solicit money from friends/family in exchange for a share of the new company?
In order for an investor to be accredited, they must make over $200,000/year or have a liquid net worth of over $1m.
http://www.sec.gov/answers/accred.htm
This bill builds in an exception for non-accredited investors to invest in much riskier companies. Before this bill, the only way for non-accredited investors to invest would be if the company went public which is very expensive.
If not, then what's the difference? The link you mention does not address that issue at all (it just defines what an accredited investor is)
The difference here is that you are inviting 1000s of random people to invest. Then even assuming you are totally honest and above board - once you are marginally succesfull the same VCs will come and screw these investors in the same way that they screw foudners.
One area that may or may not work would be if your family member loaned you the money personally. That isn't considered an investment since it is a personal loan.
But, in a personal loan, they couldn't ask for equity since that would be an investment.
The new crowdfunding rules will allow companies to publicly solicit a much larger number of investors, as long as the company is raising <$1 million, and each investor is investing <$10k or 10% of their annual income, whichever is lesser.
Disclaimers: This is an oversimplification, the law has been passed but the SEC rules have yet to be written and enacted, IANAL and really don't know what I'm talking about.
It was also illegal, before the JOBS Act, to engage in "general solicitation," which is what raising money via a publicly-viewable crowdfunding page would amount to.
Nature of purchasers. Each purchaser who is not an accredited investor either alone or with his purchaser representative(s) has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment, or the issuer reasonably believes immediately prior to making any sale that such purchaser comes within this description.
Sounds like to me that they just require you or your representative to "know what you're doing" if you're not an accredited investor.
I understand that JOBS act allows to solicit up to $1M from unqualified investors, but does it allow public offerings of up to $1M without registration?