How does crowdfunding work?
Startups looking to raise money through crowdfunding prepare and run these campaigns through an approved online platform. The Startup specifies the timing (within SEC guidelines), the amount to be raised and the deadline to invest.
Potential Investors can review company information on the fundraising platform, ask questions (once you’ve registered on the platform), read comments from others and conduct other due diligence. The platform also provides information about the risk of investing.
Individuals can invest by opening an account on the platform where the campaign is offered and specifying their investment details (dollar amount, form of payment, etc.) within a Startup's campaign pages.
When the campaign is preparing to end, Investors are notified of their investment commitment and other information about the funds raised.
After the campaign closes, the Startup communicates with the Investors at least annually.