Crowdfinance has ushered in exciting times for the entrepreneurial world.

With the passage of the Jumpstart Our Business Startups Act (“JOBS Act”) in 2012, old restrictions on how startups can raise capital, many dating back to the Great Depression era, have been loosened. These changes democratized access to capital and put more control in entrepreneurs’ hands.

One of the most important changes under the JOBS Act was Title II. This legislation mandated that the SEC lift the ban on general solicitation and general advertising in certain private capital raises. Since Title II took effect in September 2013, these companies are now free to tweet about raising money, post it on Facebook, run an infomercial, and otherwise shout it from the rooftops.

This development has been especially important for women and minorities. Historically, they have only received a fraction of venture capital dollars. I like to say that this change allowed them to scream at the top of their lungs, “Hey, world, here we are!”

That was a big deal, and a welcome reform. The only hitch was that while companies could advertise to everyone, they could still only accept funding from accredited investors. In the United States, accredited investors include individuals with an income of at least $200,000 a year for the last two years or $300,000 combined for married couples, or individuals with a net worth of at least $1 million, excluding the value of their primary residence.

Reg A’s “mini private IPO”

The final rules for Title IV, referred to as “Regulation A+,” which came into effect in June, allow companies to offer and sell up to $50 million — to accredited and unaccredited investors — subject to certain requirements and limitations. This is sometimes referred to as the “mini private IPO.”

And new, yet-to-be-issued rules under Title III, as proposed, could allow companies to sell up to a combined $1 million to all investors in the aggregate, whether accredited or not, though there are limits on amounts that can be sold to individual investors.

With these developments, access to capital has been opened up, and may be further opened up in the future. Previously, unaccredited investors were treated as not quite sophisticated enough to invest in early-stage companies, even though, ironically, they could go buy a biotech stock and lose all their money in a single day without any restrictions.

And even accredited investors weren’t fully engaged. There are 8.5 million accredited investors in the U.S., yet only a very small percentage has ever invested. Why? Many of them may not even know that they meet accreditation standards. And in the previous environment that was so restrictive, many companies just weren’t reaching out beyond a small circle. So even if you were accredited, if you weren’t personal friends with the most elite investors, or didn’t have a large family office, chances are that you weren’t even hearing about the next Google or Facebook.

For entrepreneurs, their experience was even worse. Unless you had high-level contacts and knew somebody at a venture capital or angel network, you had few options but to send a PowerPoint deck through an email. Then wait. And wait.

A global phenomenon

Now everybody can see which companies are raising money, and companies can actively connect to a whole new world of investors. And they are doing it. In droves. Since the JOBS Act reforms, Crowdnetic has tracked more than 6,000 companies that have now come online to announce their capital raises. That’s 6,000 companies that many people had never even heard of before.

This is not just an American phenomenon. It’s a global phenomenon. Global economies — especially in the developing world — are very dependent on entrepreneurship. They are trying to emulate the crowdfinance model. That’s critical, especially when you consider that according to research conducted by the World Bank, small businesses employ 60 percent of the global workforce.

At Crowdnetic, we’re helping to facilitate the crowdfinance phenomenon. We aggregate and normalize issuer information for thousands of private companies publicly raising capital through leading portals such as AngelList, Crowdfunder, MicroVentures, Wefunder, EquityNet, EarlyShares, Patch of Land, Realty Mogul and more.

Validate your product

If you’re successful at raising money, this gives you validation for your product. After all, if strangers believe in your product, that’s a good signal. When you go to raise your Series A funding from traditional venture capitalists, the first questions they ask are: Do you have customers? What’s your traction? Armed with seed money and product validation from crowdfinance, you’ll have a strong story to tell. And if your crowdfinance efforts fall flat, that’s valuable information, too. It may be a good indicator that you should build something else.

What we’ve seen is a new continuum. In this new world order, a company could conceivably go onto a rewards-based crowdfinance site like Kickstarter or Indiegogo with a product idea and raise enough money to make their idea come to light — without giving away any equity in their company. With cash in hand, a validated concept and an installed customer base, they could then either go straight to venture capitalists, or take the interim step of moving into the crowdfinance equities world and raising a million-dollar seed round before approaching VCs. They can also fund short-term needs with small business loans from peer-to-business or marketplace lending sources such as OnDeck, Funding Circle, Lending Club or Kabbage.

Whatever the route, the important thing is that this whole process puts entrepreneurs in control of their destiny. I’ll be talking about how to leverage these new crowdfinance opportunities in my talk on the main stage — and during an entrepreneurs-only workshop — at the CED Tech Venture Conference Sept. 15-16 in Raleigh, N.C.

In this brave new world, my message to entrepreneurs is this: If you have an idea but are afraid to make it happen, create your business plan, go online to find people who will support you, and get out there.

Editor’s Note:

Luan Cox is founder and CEO of Crowdnetic, a leading provider of technology and market data solutions to the marketplace-lending and securities-based crowdfinance industries. She will be a featured speaker at the CED Tech Venture Conference 2015, to be held Sept. 15-16 in Raleigh, N.C.
Cox has 20 years of financial technology leadership experience, having built four successful companies. She and Crowdnetic have been featured on CNBC and in The Wall Street Journal, VentureBeat, Forbes and The Huffington Post. She is also a proud alumna of the elite Springboard Accelerator program comprising the world’s leading women-led media and technology companies. Crowdnetic also produces the premier alternative finance conference,