In an environment where IPOs are rarified, but taxes and interest rates are abundant, Brazilian companies are presented with the possibility of raising capital publicly without going through the hurdles of registration and excessive bureaucracy. Crowdfunding is the gathering of capital via online platforms of collective investment, websites where the investor will find money-seeking projects showcased. According to the text, companies with a gross annual revenue of up to BRL 10 million are allowed to raise up to BRL 5 million per calendar year, regardless of previous registration with the CVM. Entities controlled by other companies or by investment funds must comply with a combined BRL 10 million gross revenue. Each round of funding may remain open as long as days and a minimum cap may be distributed if the project does not attain its full amount. Investor syndicates are authorized to invest in crowdfunding projects as well. Maybe the part that was most affected by the new regulation is the fundraising platform, that will have to be registered with and authorized by the CVM to operate legally henceforth.
Small businesses, which encourage a culture of entrepreneurship and create jobs, are hugely important to economic growth of Brazil. In total, the 6. At least part of that can be attributed to the difficulty of raising startup capital, especially among young entrepreneurs. One emerging tool that can aid the entrepreneurs is crowdfunding. Crowdfunding, at the most basic level, is the practice of raising money online from a large group of people.
How does equity crowdfunding works in Brazil
We also noted the popularization of the so-called Equity Crowdfunding by way of a funding platform, which has been structured by the aforementioned legal alternatives. However, due to the particularities of the Brazilian legal system, it is worth clarifying a few aspects of the Equity Crowdfunding platform, the Convertible Loans and the Convertible Debentures. Crowdfunding platforms are independent tools used by startups to raise capital with scalability. Therefore, in order to quality for an offering registration release, the transaction must meet the following criteria:.