The California bill that would legalize intrastate crowdfunding died in the state’s Senate Appropriations Committee this past week – dashing the hopes of small business leaders and advocates across the country’s most populous state.
AB 2096, originally sponsored by Assemblyman Al Muratsuchi, missed the deadline to get out of Committee and thus the Senate Floor for a vote. The bill had been in process for quite some time and now must be re-introduced during the next legislative session for it to possibly be voted into law.
Small Business California stated they had spent “literally hundreds of hours” on this piece of legislation. The bill was seen as a unique opportunity to help small businesses raise equity via crowdfunding while allowing “general solicitation with numerous investor protections that do not exist in the JOBS bill in Washington”. Small Business California declared they were “not giving up” as they continue to advocate passage of an intrastate crowdfunding exemption.
The crowdfunding exemption would have allowed $1,000,000 in aggregate securities sold to any investors during a 12 month period. Non-accredited investors would be capped at a $5000 limit during that period. Accredited investors would not be constrained by any limits.
To date 12 states have legalized investment crowdfunding with 11 states having started the process to legalize intrastate crowdfunding. California, if it was a country, would be the 8th or 9th largest economy in the world. An investment crowdfunding option could be a potential boon for both investors and small companies seeking to raise capital.
