Texas will be the Largest Crowdfunding State in America
Although the Texas State Securities Board is still in the final rule-making process, Texas is primed to become the 13th state to allow intrastate crowdfunding. Experts predict a vote in late August and legalization soon after in mid-late September, and with rules similar to the projected SEC federal rules, Texas residents will also enjoy a smooth transition into nationwide equity crowdfunding when it is enacted (TBD).
There are a variety of rules which are identical to the SEC proposal. For example, small businesses will only be able to solicit up to $1 million per year. Investors are capped at $5,000/year which is the same as anyone who makes under $100,000 on the proposed SEC platform. And as for Texas portals, they must register as dealers, undergo initial background checks and will be subjected to random inspections.
Texas Securities Commissioner John Morgan:
“The portal is an intermediary. It will host the investor offerings, post all documents required regarding that offering and there will be a discussion area. It’s a fairly streamlined approach. The public forum is an important element to the portal and expected to draw expertise, allowing for the ‘wisdom of the crowd.’ The crowd will decide if it’s a good deal or a bad deal.”
Everything is Bigger in Texas – Including Crowdfunding Population
California may have roughly 12 million more residents, but Texas is about to open equity crowdfunding to 20 million residents 18 and older. The total population of Texas is around 26.5 million, so having close to 75% of your residents of legal crowdfunding age is huge for any small business seeking funding in the Lone Star State. This will direct a lot of attention and marketing toward Texas-based investors now and once Title III is nationwide.
When Texas began considering intrastate crowdfunding, there were only three states participating at the time. As the largest crowdfunding state in America, Texas lawmakers had a Texas-sized job to do and referenced the rules of other states as well as expert advice to draft their own laws. And just so everyone is clear: the Texas state crowdfunding law will only be available to businesses and investors located within state lines.
What about Title III of the JOBS ACT? Any News?
Sadly – no. As yet another state creates its own equity crowdfunding laws, businesses and investors nationwide are growing impatient. Granted the scale of an entire country cannot be compared to an individual state, but seeing how Texas is indeed our largest crowdfunding state it shows final rulings can be attained when dealing with a large population. And when you consider the state of Texas has a higher population than over 80% of European countries, it puts everything in a much larger perspective.
Thank you again for reading – please leave your comments below!