Buying securities from early-stage companies can now be easily done beginning May 16, 2016 using the crowdfunding system. For investors who desire to choose this method for the first time, they must evaluate the risks involved in investing in these small companies, advises the Financial Industry Regulatory Authority (FINRA).

1. International Financial Corporation Securities
Regulatory Commission: All You Need to Know about
Crowdfunding from FINRA
Buying securities from early-stage companies can now be easily done beginning May 16, 2016
using the crowdfunding system. For investors who desire to choose this method for the first time,
they must evaluate the risks involved in investing in these small companies, advises the Financial
Industry Regulatory Authority (FINRA).
According to FINRA’s Senior VP Gerri Walsh, “Crowdfunding has produced great interests
among investors; hence, the temptation to ride the wave on upcoming startups can be very
strong. Nevertheless, the prospects of getting involved in new opportunities should impel
investors to stop and look for the right answers to vital questions.” He added that “unregistered
and emerging securities carry significant risk, and investors must be wary of such bright, new
object and come up with educated and logical investment decisions”.
Based on the new provisions instituted on May 16, 2016, the general public can now invest in
capital funding for start-up companies through crowdfunding. As defined, crowdfunding allows
small businesses to utilize the Internet to raise funds for their capital through limited investments
coming from a sizeable number of investors. FINRA’s announcement lays down the process by
which equity crowdfunding works, together with the income and net-worth qualifications
potential investors have to satisfy and the data provided by broker-dealers, issuers and funding
portals.
FINRA’S announcement likewise provides help to investors for them to assess whether
crowdfunding is appropriate for them. Here are some helpful tips:
1. Determine whether you can take the risk as well as the possible loss you may incur. There is
no argument that startups and early-stage businesses can fail. Be prepared then to lose every
dollar of your investment, when it does happen. Likewise, remember that your capability to
resell your investment will be quite limited during the first year. Hence, you may have to let your
investment stay the course for quite a while until new opportunities present themselves.
2. Keep updated and well aware of the financial and educational information, as well as other
reports furnished by the issuer and crowdfunding brokers. Do not hesitate to seek answers for
your immediate concerns regarding the investment, such as possible loss of your investment.

2. Seek the opinions of unbiased professionals and other investors, for instance, an accountant who
comprehends financial statements and who may not have any personal stake on the investment.
3. Consider the possibility of fraud. Safeguard your interests by studying how scammers can
dupe you; so you can avoid them. Get in touch with investment professionals through
BrokerCheck, and visit FINRA’s Funding Portal website on www.finra.org which went online
on May 16, 2016.
4. For the most recent Investor Alerts and other vital investor information, subscribe to Investor
News.
The International Financial Securities & Industry Regulatory Commission is recognized as the
biggest independent securities regulation agency for all firms operating in the United States.
FINRA commits to safeguard the interests of the investor as well as the integrity of the securities
market through efficient regulation and appurtenant compliance and technology-based systems.
FINRA covers substantially every aspect of the securities market – beginning with registration
and education of all industry players to evaluation of securities companies, writing regulations,
enforcement of such regulations and the federal securities laws, and the education of the
investing public in general. Moreover, FINRA conducts investigations and other regulatory tasks
for equities and options markets, including trade updates and other related industry services.
Finally, FINRA serves as the main administrator for resolutions of disputes for investors and
securities firms.
To obtain more information, kindly visit www.finra.org.