The US Securities and Exchange Commission has just released a new inflation-adjusted increase in the investment limits for securities-based crowdfunding.
Crowdfunding is a financing method in which money is raised through soliciting relatively small individual investments or contributions from a large number of people.
The risk of investing in early stages of a venture exposes investors to risks that may not be as prevalent with investments in publicly listed companies.
The SEC said the limit is important because for example, investing in a crowdfunding opportunity may come with increased speculative risk in connection with whether the venture succeeds at all as well as the increased illiquidity associated with investing in a company not listed on a stock exchange.
New limits are now in place for US citizens based on their annual income. For example, if a person’s annual income or net worth is less than $107,000, then during any 12-month period, you can invest up to the greater of either $2,200 or 5% of the lesser of your annual income or net worth.
See below the full bfreakdown and limits:
|
Annual Income |
Net Worth |
Calculation |
12-month Limit |
|
$30,000 |
$105,000 |
greater of $2,200 or 5% of $30,000 ($1,500) |
$2,200 |
|
$150,000 |
$80,000 |
greater of $2,200 or 5% of $80,000 ($4,000) |
$4,000 |
|
$150,000 |
$107,000 |
10% of $107,000 ($10,700) |
$10,700 |
|
$200,000 |
$900,000 |
10% of $200,000 ($20,000) |
$20,000 |
|
$1.2 million |
$2 million |
10% of $1.2 million ($120,000), subject to cap |
$107,000 |
