Since the passage of the JOBS Act in 2012 – which, among many, many other things, legalized equity crowdfunding – and the subsequent adoption of Title III of said act in 2014, the number of these crowdfuding platforms has begun to rise.1 It has been a slow process, as each equity crowdfunding platform is subject to a rigorous approval process on a case-by-case, and even on a state-by-state basis, but some really interesting platforms are beginning to emerge. One such platform, Crudefunders, just received Texas state approval on February 9th.
Crudefunders is bringing equity crowdfunding into a market that has heretofore been dominated by billionaires and multinational conglomerates: the oil industry. The company, which operates only in Texas, allows individuals to quickly jump into the oil industry:
Today, starting with as little as $1,000, you finally have the opportunity to become a Texas Oil Baron through our pooled investment opportunities in the oil and gas sector. Crudefunders provides every Texan the opportunity to own a piece of a Texas oil well, creating a legacy of wealth for generations to come – and you can do it all online from the comfort of your home or office.2
It is important to note, Crudefunders is different than your standard crowdfunding platform in a few major ways. The company is much more than a platform. Rather than just building a crowdfunding site and letting it regulate and take care of itself, Crudefunders takes a much more hands-on approach. They do not allow just any project on the platform, rather, “it [Crudefunders] is the only company of its kind to vet projects before they enter the web site. Once on the site, they rely on the wisdom of the crowd—the investors –who use each other to help make better decisions.”3 What’s more, Crudefunders offers an educational component. There is a huge resources section, containing a wealth of information on all topics from the drilling process to account management.
- The Jumpstart Our Business Startups Act (JOBS Act) changed a great many laws concerning the way in which startups can raise money. The bill is massive, but a few provisions are important for this article. Essentially, the bill allows individuals to invest in companies in exchange for equity. Also, it allowed companies to publicly advertise the fact that they were seeking investments. The SEC’s adoption of the Title III provisions removed the accredited investors stipulation from the process. Prior to Title III, individuals could only invest in companies for equity if they had a net worth of $1 million or more, or earned more than $200,000 annually. Title III allows unaccredited investors to invest in companies for equity, but caps the maximum investment at $5,000. For more info on the JOBS Act, here is the Wikipedia Article ▲
- Crudefunders.com ▲
- Crudefunders, “about” ▲