Equity Crowdfunding News for The Centennial State, The Sunshine State and The Prairie State
Hello everyone and welcome to our latest intrastate crowdfunding update. A lot has happened over the past several weeks including our very own registration as a Texas intrastate crowdfunding portal! We are honored to be one of the first registered Texas crowdfunding portals and thank the Texas State Securities Board for accepting our application. If you have any questions about getting your account started, please call, chat or email our team right away.
As for intrastate crowdfunding nationwide, a handful of states have recently taken giant leaps toward enacting their own laws. Industry experts were confident that 2015 would experience a lot of early activity and their predictions are certainly coming true. Today we will discuss the progress of Colorado, Florida, Illinois and Virginia and their path to joining Texas and the other currently active intrastate crowdfunding states.
Colorado Intrastate Crowdfunding
Colorado House Bill 1246 cleared a major hurdle with state legislature this past week and is primed to become law in the near future. The Bill, sponsored by Representatives Pete Lee (D-Colorado Springs), Dan Pabon (D-Denver), and over a dozen others, is quite similar to most intrastate crowdfunding laws across the country. Companies can host offerings on registered web portals and raise up to $1 million per year and non-accredited investors can invest up to $5,000 per company.
Colorado Securities Commissioner Gerald Rome, who spoke in favor of the bill, admires it for finding a balance between helping small businesses grow and protecting investors from fraud. Rome offered this quote in a Colorado Springs Gazette article:
“We always want to be mindful of what past events have taught us. The penny stock market was a haven for fraud, and the result of it caused an extreme distrust of investors in the capital markets.”
Intrastate crowdfunding is certainly the answer!
Florida Intrastate Crowdfunding
As reported in the Orlando Sentinel on Wednesday, equity crowdfunding is gaining steam in Florida thanks to the support of three Orlando businessmen. Carlos Carbonell, founder of the Orlando mobile app development company Echo Interaction, worked with two Orlando attorneys to draft House Bill 275. A similar effort out of Tallahassee did not succeed in 2014 but House Bill 275 recently passed through the House Banking and Insurance Committee.
The investor limits proposed by the new Florida intrastate crowdfunding bill are similar to the proposed rules for Title III federal equity crowdfunding. Investors making less than $100,000 per year can only invest $2,000, 5% percent of their annual income or 5% of their net worth. As for businesses, any company seeking capital between $100,000 and $500,000 would be required to post a financial statement signed by a chief financial officer. Capital raises over $500,000 would require the company to produce an audited financial statement signed by an independent CPA.
It looks like the new House Bill in Florida is off to a great start. Good luck!
Illinois Intrastate Crowdfunding
On Monday, March 2nd, small business advocates gathered at the Chicago tech hub 1871 to support the proposed intrastate crowdfunding bill in Illinois. Representative Carol Sente (D-Vernon Hills), a small business owner herself, filed the legislation in late February. Sente is a longtime champion of small business initiatives and the chief sponsor of the intrastate crowdfunding legislation. She strongly urges the state to recognize Illinois’ need to compete with its neighbors (Indiana, Wisconsin and Michigan) who have each passed legislation for intrastate crowdfunding.
Representative Sente’s bill allows non-accredited investors to invest up to $5,000 per company per year if they have a net worth of less than $1 million and less than $200,000 in annual income. Companies who submit audited financial statements can raise up to $5 million per year. Those who don’t will be able to raise $1 million annually.
Representative Sente shared her optimism for the Bill in a Chicago Tribune article:
“Being able to balance the needs of the business owner as well as the person investing was one thing that was important to me. I think we have an outstanding bill that will go far. I do believe that it has bipartisan support.”
It looks like Illinois has a large group of advocates as well so we wish them the best. Intrastate crowdfunding is going to transform how companies raise capital and give investors a chance to get equity for their crowdfunding investments instead of gifts and prizes. The truCrowd Texas team is thrilled to have our portal open and look forward to helping the businesses and investors here in Texas make the most out of equity crowdfunding.8
Thank you for reading and please leave your questions and comments below!