According to the U.S. Small Business Administration, Georgia small businesses created 87 percent of the new private sector jobs from 2004-2008. Even more jobs can be created if more Georgia businesses are capitalized. In 2012, the State of Georgia made it easier for Georgia-based businesses to raise capital, under a rule called the “Invest Georgia Exemption” or “IGE.”
IGE loosens restrictions on how new and small Georgia-based businesses can raise capital from the public market. IGE permits intrastate Crowdfunding – Georgia and Kansas are the first and currently the only states to legalize equity-based crowdfunding for non-accredited investors. Of course, accredited investors can participate too.
SterlingFunder co-founder David Lilenfeld says, “We are excited to be the first crowdfunding portal for both accredited and non-accredited investors in the entire country. Georgia-based businesses will lead the country in this new and important way of raising capital.”
The IGE includes the following features:
1. Allows Georgia-based businesses to sell equity via crowdfunding to Georgia residents, whether they are accredited or non-accredited investors. To qualify for the exemption, the company must (1) be a for-profit business, (2) be formed under the laws of the State of Georgia and registered with the Secretary of State, (3) have its principal office in Georgia, and (4) carry out a significant amount of its business in this State.
2. Allows Georgia-based companies to publicly offer their securities through a crowdfunding portal, such as SterlingFunder.com.
3. Non-accredited investors (individuals with annual income less than $200,000 or net worth less than $1,000,000) who are Georgia residents can invest up to $10,000.00 per year under IGE.
4. Accredited investors (individuals with annual income greater than $200,000 or net worth exceeding $1,000,000) can invest as much as they feel is appropriate.
5. The maximum raise per company is $1 million per year, not including sales to controlling persons.
6. Funds must be deposited in a financial institution which is authorized to do business in Georgia.
7. Companies issuing shares in reliance on the exemption must inform investors that the securities are unregistered and may not be resold to non-Georgia residents for a period of nine months after completion of the offering.
It is important to know that the Federal Securities Act includes an intrastate exemption but, until now, no states other than Kansas – and now Georgia – have taken advantage of it. Now it is time for Georgians to take advantage of this opportunity by investing in new and growing Georgia businesses and kickstarting Georgia’s economic recovery and expansion.