In a big win for LPPFusion and other start-ups, the US Security and Exchange Commission, (SEC), voted Nov. 2 by 3 to 2 to adopt multiple changes in investment law. For us, the most important change is to allow Special Purpose Vehicles (SPVs) that permit unlimited numbers of non-accredited investors to invest in companies like ours. This will, starting in January, allow LPPFusion to raise investment money from thousands of supporters. We will continue to welcome accredited investors and such investments are possible right now.
Previous to this rule change, companies like ours, which are not listed on stock exchanges, could only raise money from 500 non-accredited investors, a number we have already reached. (An accredited investor must have $1 million in assets or $200,000 in annual income. Non-accredited investors are everyone else.) While greater numbers were not strictly prohibited, the SEC required companies with more such investors to become publicly listed when certain other criteria were met. This might have forced LPPFusion into a very expensive and risky Initial Public Offering (IPO) before we were ready.
Now, all non-accredited investors will invest through a Special Purpose Vehicle, a company set up just to funnel money to LPPFusion. The SPV will be listed as a single shareholder on LPPFusion’s books. But potentially unlimited numbers of investors can buy shares in the SPV which will be identical to shares in LPPFusion.
This change will also allow LPPFusion to lower the minimum investment in future crowdfunding campaigns from the $1,000 that we previously had maintained. We will be sharing details of the next crowdfunding campaign as soon as they are decided by our management and Board of Advisors. Stay tuned!