Wisconsin’s startup companies finally have another way to raising capital! A new state law, signed into law by Governor Scott Walker last year, now grants up and coming entrepreneurs rights to raise up to $1 million from state investors through online crowdfunding websites. Up to $2 million may be raised if the issuer has had an audit within the previous year and has given the results to investors and state regulators. Non accredited investors may now invest up to $5,000 in a Wisconsin business. The legislature, which passed the law unanimously, took a different approach in defining an accredited investor. Recognizing the limitations of the federal rule, Wisconsin considers an accredited investor an individual that earns $100,000 per year.
According to Tim Keane, crowdfunding may help kickstart more startups and may even start more private ventures.
“Often times there are many more good ideas than there is money to fund them, so this is a way for the state to generate more investing in companies presumably with a broader base of investors.”
Sharing details about how the state plans to protect the interests of the investors, Mr. Keane noted,
“It seems that the state is going to mandate having intermediaries emerge who will certify that these are legitimate offerings and put their seal of approval on them.”
As previously reported by Crowdfund Insider, the new crowdfunding exemption was broadly supported by the state legislature. The new law was created in part due to the frustration of the in the federal JOBS Act. Even when the rules are finalized, the regulations may be too onerous for some small businesses. Representative David Craig stated;
“Where the federal government has delayed, Wisconsin has acted..Where other states have failed to allow small business to harness the power of the internet, Wisconsin has embraced it.”
Stating a key reason why this law was passed, Rep. Craig commented,
“As small business goes, so goes our economy in Wisconsin and nationally. The number one problem I hear from small businesses is lack of access to capital and this law directly addresses that.”