Not just wealthy people but anyone would be able to invest in startups thanks to the new crowdfunding rules taking effect Monday in the US.

Earlier investors backing private companies needed to be “accredited,” meaning they make at least $200,000 a year and have a net worth of $1 million or more (excluding their home). The change overrides this longstanding Securities and Exchange Commission requirement.

Startups will now be able to sell shares to people regardless of their wealth or income, using the online crowdfunding portals, so long as the founders have submitted annual financial reports to the SEC. In exchange, companies can raise up to $1 million.

The rules are the result of industry lobbying to make the process more democratic and would be implemented as part of Title III of the JOBS Act and took four years in the making.  The potential change in crowdfunding, which has typically rewarded backers with T-shirts, events tickets and early iterations of gadgets, is the now the big question.

While some startups are hanging back because they find the rules too onerous and the fundraising limit too low, others are keen to sell shares to small investors. However there are no plans for Kickstarter, the biggest and best-known crowdfunding site, to join the party. Hence regular people who hope to get in on the next Uber or Airbnb may be disappointed.

The most likely to take advantage of the option are non-tech entrepreneurs who have trouble attracting venture capital, say analysts. Like Tom Lix who wants to expand his Cleveland liquor startup by raising $1 million on the Wefunder portal.

“I would love for my customers to be my shareholders. I couldn’t ask for better fans,” says Lix, whose Cleveland Whiskey LLC says it can age whiskey in 24 hours.

The new fundraising rules could especially appeal to companies outside venture-capital rich California and New York, said Richard Swart, a founding board member of the Crowdfunding Professional Association. along with minority-led businesses, entrepreneurs in theater, food production and energy have expressed the most interest so far, he says.

“We’re hoping crowdfunding can start to equalize the distribution of funding,” says Swart, who also serves as chief strategy officer at NextGen Crowdfunding LLC,  a year-old startup that provides information about funding portals, individual companies and crowdfunding regulations.

However the new funding option could have limited appeal, acknowledges Swart and others. Many companies, especially in tech, consider the $1 million limit too low and the costs to register and submit annual results too high, says Jim Fulton, an attorney at Cooley LLP who specializes in corporate and securities law for emerging companies. less than a dozen clients have asked about the option. The new law however has another turnoff which requires that companies communicate with investors as individuals rather than as a group.

“If you’re not going to raise $5 million, I don’t know why you’d subject yourself to this burden”, Fulton says.

How much a company wants to raise and the company’s complexity would decide the costs. While Anikona Farm, which operates a coffee plantation in Hawaii, expects to pay between $1,000 and $20,000 to raise roughly $100,000, Cleveland Whiskey expects to pay between $40,000 and $50,000 to raise $1 million, says owners at each company.

(Adapted from Bloomberg)