The short answer is no, crowdfunding is not considered social media under the law, however social media does have a significant impact on the success of crowdfunding. Crowdfunding has become increasingly popular for new businesses trying to reach investors, with its increased popularity there has been a push to better regulate this avenue of funding. Crowdfunding brings investors and entrepreneurs together by utilizing extensive social media platforms and crowdfunding websites, such as GoFundMe and Kickstarter. Social media is a key factor in the success of crowdfunding because it is the easiest way for campaigns to reach the maximum number of people through just a few shares and reposts. In 2012, the JOBS Act was first enacted, creating an industry for crowdfunding where there were very few regulations. The primary regulation at the time was that only accredited investors could invest, but in 2015 the second part of the JOBS Act went into effect, allowing for companies to source capital from non-accredited investors- opening the door to anyone looking to invest their money. With a larger pool of investors for companies to reach, an added level of regulations became necessary. As a result, the Securities and Exchange Commission (SEC) made it a requirement for all crowdfunding transactions to go through SEC-registered intermediary sites. These intermediary sites are where the use of social media comes into play. Companies get the word out about a potential new investment by advertising through social media platforms, these platforms then direct the potential investor to an SEC regulated site such as GoFundMe or Kickstarter. There are several unique aspects to crowdfunding that separate it from standard investing. One of these conditions is that crowdfunding is done quickly, usually companies will open the opportunity for investing from one to sixty days with a set goal of how much they are looking to raise. If a goal is not reached by the allotted time a company sets for themselves, the funds are typically returned to avoid investors from paying for nothing. Most funds are raised at the initial launch of the fundraising and then again as the deadline approaches, therefore it is more advantageous for a company to shorten the length of their fundraising campaign. Without the use of social media, companies would be unable to stir up the same amount of excitement and awareness surrounding their project. The use of these platforms also allows for investors and the promoter to track the progress of the funding throughout the entire campaign. For these reasons, social media is essential for the success of crowdfunding platforms, even if crowdfunding is not legally defined as a form of social media.
If you have questions about a family law case contact a family law attorney like the ones at Brandy Austin Law Firm, PLLC.