Legal Issues Around Crowdfunding

March 31, 2017 11:00 am

Crowdfunding is becoming increasingly popular as a way of funding projects. Depending on the platform it can be for creative purposes but equally more charities and other forms of business are benefiting from it. However, there are potential pitfalls and it is important to be aware of the legal issues that can arise before starting a crowdfunding campaign.

Intellectual property

As with any other form of investment pitch it is important to ensure that your intellectual property is protected. Whether it is a patent, trademark or copyright you should do this in order to prevent anyone infringing on your property.

Protection

Another thing to check is the platform itself – do they have financial protection? This means that in the event of the platform going bust people’s investments will be protected.

Where the money goes

This is important – it needs to be made clear where the money is going and what it will be spent on. Aside from reassuring people pledging money it also ensures that people stay focused.
It is also vital for people working on the crowdfunding to have a clear timeframe and to keep people updated. Problems and delays can happen and most people can accept that so long as they are properly kept informed.

Be aware

Crowdfunding is still relatively new- it is important to remember that the rules can change and different platforms will have different rules on what you can offer (for example some allow equity in a project and others forbid it).

It is also important to look at how much the platform will take as a fee and whether that includes taxes or if you have to look into that yourself.

If you are looking to start a crowdfunding campaign but are unsure what you want to do it helps to talk to a legal professional with the appropriate experience in order to work with you to see what platform is best for your needs and to check over any potential legal issues.

For more information please contact us today and we will be happy to discuss your needs in more detail.


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