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Illustration: Annelise Capossela/Axios

Beginning Monday, startups can raise up to $5 million every year from ordinary people who can get a proportionate slice of the company in return.

Why it matters: The changes take effect amid a retail investing mad dash, kicked into high gear by the pandemic and the extra money in (some) people's pockets.

  • It gives regular investors the opportunity to participate in a private company's upside (or the opposite, if a company goes under).

Catch up quick: Previously companies had been limited to raising a little more than $1 million in "regulation crowdfunding" per year.

  • This higher threshold could draw a new crop of later-stage companies into the crowdfunding equity trend that may have felt the $1 million wasn't worth the effort.
  • "There's kind of a snowball effect: When more companies do this, they're bringing their audience and customers, which brings in a whole bunch of new investors in the market," says Brian Belley, founder of Crowdwise, an equity crowdfunding research site.

Other changes taking effect today: Retail investors are now allowed to invest higher amounts this way each year, and companies can essentially pool crowdfund investors into a single line on the cap table.

  • Companies can also scope out whether there's crowdfunding interest before filing for eligibility, which can be a burdensome process.

What they're saying: "It increases the likelihood that good companies raising money from other options will also decide to allow their fans and customers and supporters to invest alongside those same terms," Nick Tommarello, founder of WeFunder, an equity crowdfunding portal.

What's going on: Gumroad — a platform that allows creators to get paid for their work — plans to raise $6 million in its latest funding round, it told Crunchbase today. It has already raised $1 million and plans to crowdfund the rest.

  • As of 4 p.m, it had raised more than $3 million from over 4,000 investors. (It's updating these figures on the hour here).
  • Gumroad's CEO Sahil Lavingia tells Axios the company wanted to let creators invest in the platform — it didn't necessarily need the money.

What to watch: Whether the eagerness ordinary individuals are displaying for the stock market translates into startup investing enthusiasm, as more cash flows into America's wallets.

  • Yes, but: The slosh of cash cuts both ways. Companies are raising bigger rounds of funding earlier, a nod to the voracious appetite of venture capitalists — which could make crowdfunding less necessary.
  • But these new rules create a bigger outside pool for companies, especially those without as much access to (or who have been rejected by) venture capitalists or angel investors.

By the numbers: So far the movement has been teeny, compared to the billions invested in startups each year.

  • Over 1,000 companies raised a record $215 million from equity crowdfunding last year.

Go deeper

Surprising pandemic side effect: Soaring trade deficits

Source: Census Bureau and Bureau of Economic Analysis; Chart: Axios Visuals

Inflation and jobs may get all the economic headlines, but meanwhile a big shift is taking place in the underpinnings of the world economy: The U.S. trade deficit is soaring.

What's happening: Americans' spending on imported physical goods has gone through the roof, while exports are growing slowly, making the U.S. the world's consumer of last resort.

Mike Allen, author of AM
2 hours ago - Politics & Policy

Third Way: "Big Lie" could become "Big Coup"

Graphic: Third Way

Third Way, the center-left think tank, is urging fellow Democrats to respond to the Capitol riot with "the size, scope, and seriousness of a presidential campaign," co-founder Matt Bennett tells me.

Driving the news: "For the first time in U.S. history, a party must mount two parallel presidential campaigns: one to win the election, and the other to prevent its theft," Bennett said, calling this "a Paul Revere moment."

Advocates say Biden has let Haitian migrants down

Photo illustration: Aïda Amer/Axios. Photos: Chip Somodevilla/Getty Images, Christian Torres/Anadolu Agency via Getty Images

Continued turmoil in Haiti is causing a growing number of Haitians to try to make it to American shores — and some advocates say the Biden administration isn't supporting this community in its time of crisis.

The big picture: Haitian-American activists in South Florida told Axios Today they feel like President Biden has gone back on campaign promises he made to the community to stand up for them.