It's common, but there actually is no exemption for friends and family. Those offerings should technically be done under the 506 exemption which require investors to be accredited.
It was also illegal, before the JOBS Act, to engage in "general solicitation," which is what raising money via a publicly-viewable crowdfunding page would amount to.
That's what I was wondering -- I've heard of the accredited investor barrier to entry, but it does seem like rule 506 would allow for investment from anyone.
Really? Sorry, not trying to be dense here, but from what I see in 506.b.2.ii:
Nature of purchasers. Each purchaser who is not an accredited investor either alone or with his purchaser representative(s) has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment, or the issuer reasonably believes immediately prior to making any sale that such purchaser comes within this description.
Sounds like to me that they just require you or your representative to "know what you're doing" if you're not an accredited investor.
But isn't a general solicitation on a public site considered to be a public offering? My understanding of what a "public offering" is, is that any general solicitation to the public, without qualification, for investment in a security in a company, where a security is any investment without a guaranteed return (as opposed to debt).
I understand that JOBS act allows to solicit up to $1M from unqualified investors, but does it allow public offerings of up to $1M without registration?
It was also illegal, before the JOBS Act, to engage in "general solicitation," which is what raising money via a publicly-viewable crowdfunding page would amount to.