SAN FRANCISCO, Sept 25 (Reuters) – Entrepreneur Nicole O’Rourke has a novel idea for raising cash that would have been illegal until this week: smacking a “fund me” sticker on every bottle or can of hair products from her start-up business, Rock Your Hair.
O’Rourke is among the first to take advantage of the lifting of a years-long ban, mandated by the 1933 Securities Act, on using advertising to find investors in private companies. Intended originally to prevent opportunists from targeting the gullible, it has long been considered a bedrock protection against scams. Lifting it, with some protections, should help startups and thus boost the overall economy, proponents say.
Scores of websites have sprung up to connect budding financiers with struggling entrepreneurs who are eager to tap new sources of cash and close funding rounds far more speedily than under the traditional venture model. There are now dozens of sites with all sorts of business models, ranging from charging companies to create listings to taking a cut of an investor’s eventual profits.
While many have been around for months, in some cases years, they could not highlight details about the deals on their sites until Monday. Before then, potential investors had to be registered on the site as accredited investors — those with net worth, not including their homes, of $1 million or more– to learn about the start-ups seeking funding.
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