Digital badge company Basno got its start generating badges for athletes who completed the New York City Marathon. Starting today, it’s generating badges for accredited investors.
When the Securities and Exchange Commission lifts its 80-year-old ban on general solicitation on Monday, private companies will be allowed to publicly advertise their efforts to raise funds. The historic change brings with it a new rule that requires that any investor wishing to fund a private company be accredited by a reputable third party. Until now, investors had been able to declare that they meet the U.S. requirements for being accredited, but as of Monday, they will need to have a third party, such as an accountant or lawyer, vouch for their accredited status.
The change has caused a bit of uncertainty among entrepreneurs and investors, who now have to deal with an extra step in the fundraising process. But for the founders of Basno, the change represented an opportunity.
“As we read all the news with what the SEC is doing with general solicitation — and there has obviously been a good bit of debate as to how effective that is going to be, how valuable that is actually going to be for the ecosystem — what was clear to us was that it is definitely not going to be valuable if verifying the accreditation of investors is not easy and efficient and reliable,” says Nicholas Thorne, Basno’s CEO and co-founder.