Verifying your Eligibility as an Investor – The Law and The Solution

If you’ve been to SterlingFunder before, you know that equity crowdfunding is likely to transform capital formation in the United States. Since securities laws have, at long last, been updated to accommodate the Internet age, investors can take advantage of new investment opportunities online.

A significant issue SterlingFunder and the rest of the crowdfunding industry faces is the legal requirement of verifying investors. Verification of an investor’s state of residence and possibly his/her income (depending on the type of investment) are required. Furthermore, for each deal, it is up to SterlingFunder to confirm that each investor is eligible to actually invest. Investing is not just making a purchase online, it’s agreeing to become a part of something you believe in with the risk of your own capital. Investing in equity crowdfunding is an exciting opportunity, experience, and potentially rewarding.

Still, the industry’s current solutions for meeting these verification requirements are far from advanced. The SEC has said that collecting sensitive information like investor tax returns would be enough proof of investor eligibility, but that is rather invasive for the investor. Alternative solutions take the matter out of SterlingFunder’s hands and have a third-party verify investor eligibility. This is attractive to investors since they will not have to provide personal information on multiple equity crowdfunding platforms.

For equity crowdfunding to be feasible on a large scale, the industry needs a verification method that puts the interests of investors first. We looked for an inexpensive and fair solution for our investor-customers. That’s how we came across Accredify, whom we recently partnered with. Accredify agrees with our vision of putting investors first.

Accredify’s solution leverages publicly available government databases and financial technology to make the verification process online secure and quick for an investor. Best of all, when using their system we don’t actually have to see an investor’s personal information, instead we rely Accredify’s certification process. As another plus for investors, you don’t have to provide you personal information on other crowdfunding sites – instead use Accredify’s certificate.

In short, partnering with Accredify delivers a number of benefits to our investor-customers:

1. Verification is Instant – Since Accredify gives you the tools and reminders year round to stay verified, meeting compliance with a portal becomes instant thanks to their “Facebook Connect” style API.

2. Your Personal Information is Not Exposed - Since we can rely on Accredify’s certificates for verification, we will never ask you to supply your personal information. Instead, we can focus on what we do best, providing you the information you need to feel comfortable about your equity crowdfunding investment decisions.

3. Universal Certification - You can feel comfortable about investing online, knowing that you have taken the right steps to do so.

We’re excited to partner with a company that shares our values. We know that by giving investor-customers control of their verification, we can focus on providing a better platform experience.