“There is tremendous momentum behind Crowdfunding as a tool for business finance and it makes sense for Florida, with the country’s fourth largest economy, to be an active participant.” (Michael Mildenberger)
The Florida State Senate and House have passed an Intrastate Crowdfunding bill today on the 6th of May, 2015, and it is expected to be signed by Governor Rick Scott this week. The new exemption means an investor no longer must be “accredited” or a higher net worth individual – a designation that has excluded much of the investing population in the past. Thus, this new legislation will allow online crowdfunding platforms to register and conduct business in the state of Florida within the guidelines set out in the bill. With this law, Florida will join a growing list of states throughout the country that have passed their own Intrastate Crowdfunding laws.
This is not the first time Florida attempted to legalize investment crowdfunding. The bill went through the process in 2014, but ran into concerns about consumer protection raised by the state’s Office of Financial Regulation. The new bill addresses those concerns by requiring more financial disclosure about the investment – particularly the risk involved.
According to Michael Mildenberger, a Florida based Funding Wonder CEO, the bill will both create more capital opportunities for small businesses and provide Florida residents a chance to invest in emerging companies in their own communities. Many people are familiar with crowdfunding because of websites that allow anyone to contribute small amounts of money to a young company or organization in exchange for an early release of product, for example. Equity crowdfunding, on the other hand, is a step beyond that: It allows people to invest directly in startup companies or small businesses for relatively small amounts of money, and then receive shares of ownership in return. If the business succeeds, its value goes up together with the value of the shares making it an attractive investment.
Sally Outlaw the President of the Florida Crowdfinance Association and CEO of peerbackers, too, is happy to see the Crowdfunding bill being approved. “I’m encouraged to see the legislature embrace new forms of finance to ignite entrepreneurial innovation in our state,” she said. “This bill not only creates more capital opportunities for small businesses but also provides Florida residents a chance to invest in emerging companies in their own communities.”