Last week, North Carolina Commerce Secretary, John Skvarla, revealed that crowdfunding could be the answer to small businesses in the state.
According to the Triangle Business Journal, legislators filled a bill last month that would allow non-accredited investors to fund up to $2,000 into private ventures. The bill reads, “By facilitating investment, The General Assembly can promote the formation and growth of smaller North Carolina enterprises, along with additional job formation, and can permit businesses to raise capital using crowd funding unencumbered by excessive government regulation.”
Skvarla, who is also a founder of law firm, Skvarla, Wyrick and Robbins, recalled his experience with starting up the business. “I was the guy who had to build a law firm based on entrepreneurialism and venture capital. It was the most remarkable rocket ride I have ever experienced in my life. The success of the Triangle at that point had started to spin out a lot of interesting early stage opportunities. Crowdfunding is the early-stage company that needs capital to begin or capital to take the next small step. It doesn’t have to be biotech. It doesn’t have to be pharma. It could be more traditional-type companies.”
Skvarla noted that he has been advocating to open up the funding window for smaller companies throughout North Carolina. Although he supports the crowdfunding, Skvarla does warn that the funding method has some risks. Which is why he supports the $2,000 max amount for unaccredited investors. “Generally, people that are going to invest in something are not going to ruin their lives over $2,000.”
Revealing whether or not he would look to the online crowd for help, Skvarla explained, “If I needed to raise half a million dollars, I wouldn’t go to the Internet. I’d go to people I know. That, in of itself, mitigates the risk.”
Skvarla also pointed out that 80% of North Carolina’s workforce is notably incorporated under the small business designation. “And if you think about, even big businesses had to start as a small business.”