1871, advocacy group tout crowdfunding bill as good for small business
Small-business advocates gathered at the 1871 tech hub Monday to support a bill that would allow Illinois companies to sell stock through increasingly popular crowdfunding sites.
Proponents say legislation filed last week by State Rep. Carol Sente, D-Vernon Hills, would increase access to capital for small businesses and startups while also keeping Illinois competitive with Michigan, Wisconsin and Indiana, where the practice is now legal.
Congress passed a law in 2012 that permits equity crowdfunding, but the Securities and Exchange Commission has yet to finalize rules. Some states have stepped into fill the void locally, and Sente said her bill, which would apply only to Illinois companies and investors, does the same.
“Being able to balance the needs of the business owner as well as the person investing was one thing that was important to me,” Sente said at Monday’s news conference. “I think we have an outstanding bill that will go far. I do believe that it has bipartisan support.”
Crowdfunding sites such as Kickstarter and Indiegogo allow companies or individuals to make appeals for financial support. But such sites allow supporters to receive only rewards, often a product the company is raising money to produce, not stock in a company.
Under Sente’s bill, investors would be able to buy stock in a company on a crowdfunding site, with limitations. Non-accredited investors — people with a net worth of less than $1 million and less than $200,000 in annual income — could invest no more than $5,000 per year per company. The bill, as submitted, would allow companies with audited financial statements to raise up to $5 million annually while those with no audited financial statements could only raise up to $3 million annually.
But Sente said Monday she plans to lower those caps to $4 million and $1 million, respectively.
Elliott Richardson, CEO of the Chicago-based Small Business Advisory Council, said his organization would lobby legislators for passage of the bill.
“Interstate equity crowdfunding can be an absolute game-changer for the small business community,” he said.
Press Conference Introducing Recently
Filed Legislation To
Bring Intrastate Equity Crowdfunding to IL
CHICAGO (March 2, 2015) – Access to capital remains a significant challenge for many small
business owners and entrepreneurs in Illinois. Today, March 2nd at 1:00PM,
the Small Business Advocacy Council (SBAC) and Representative Carol Sente will be holding a press conference at 1871 highlighting recently filed legislation
that will allow Illinois businesses and entrepreneurs to raise funds through
intrastate crowdfunding. This new vehicle for raising capital will empower the
small business community and stimulate our state’s economy.
The Small Business Advocacy
Council, attorney Anthony Zeoli of Chicago based law firm Ginsberg Jacobs LLC,
and State Representative Carol Sente have been leading the charge on this
issue: Elliot Richardson, SBAC CEO, explains, “Intrastate equity
crowdfunding will encourage local investment. It will empower the small
business community. Many states, including Wisconsin, Indiana and Michigan,
have already passed legislation allowing companies to raise money in this way.
Passing legislation allowing for equity intrastate crowdfunding will ensure
Illinois businesses are able to compete on a level playing field with those in
neighboring states.”
Elliot Richardson, 1871 CEO
Howard Tullman, Representative Sente and other business leaders will be
speaking at the press conference.
As the legislation’s chief
sponsor, Sente adds, "I'm thrilled to again be working closely with the
SBAC, this time on their top priority of crowdfunding. Entrepreneurs, such as
myself, value creative ways to finance our business ideas and often find the
requirements of traditional lending sources challenging and therefore cannot
adequately fund our venture. With this legislation, Illinois business owners
will have another vehicle to generate resources for their business. We are
working toward an extremely reasonable balance between opening up avenues that
stimulate economic development and making sure consumers understand the online
investments they are passionate about funding."
1871 CEO Howard
A. Tullman stated, "Equity
crowdfunding is a critical resource for the new businesses that
make significant contributions to job and economic growth across the
United States. Since the SEC has not yet issued regulations implementing
the provisions of the JOBS Act to allow equity crowdfunding in the United
States, this bill to allow intrastate equity crowdfunding in Illinois is an
important step toward ensuring that our startup community can compete on a
global scale."
Zeoli, a strong advocate for
intrastate crowdfunding, explains, “The filing of the Illinois Intrastate
crowdfunding bill is a tremendous step forward for Illinois small businesses
and entrepreneurs. The proposed bill, if passed, will give Illinois
entrepreneurs and other business owners the ability to raise much needed
capital from Illinois investors. This will mean more available capital for
Illinois entrepreneurs and small businesses, resulting in more Illinois jobs
being created by these entrepreneurs and small businesses.”
Our neighbors in Michigan,
Wisconsin and Indiana have all passed legislation allowing equity intrastate
crowdfunding. Passing this legislation will make Illinois more competitive,
encourage innovation and spark investments in local communities.
Elliot Richardson
of The Small Business Advocacy Council is available to speak on the conference
and this subject.