The House of Delegates today passed Del. Scott Taylor’s legislation to make it easier for Virginia entrepreneurs to raise money for their startup businesses through “crowdfunding.” The bill creates an exemption from some of the requirements of the Securities Act for businesses in Virginia raising money from investors in the Commonwealth.
Speaking about the passage of his legislation, Del. Scott Taylor said, “The greatest challenge that startups with good ideas face is finding the capital to grow. ‘Crowdfunding’ has grown to a multibillion dollar industry that lets entrepreneurs make their case to small investors and get their ideas off the ground. This legislation will make it easier for Virginians to invest in promising Virginia startups, creating a culture of entrepreneurship and more good-paying jobs.”
“Using crowdfunding tools, my partner and I were able to meet our goal of raising $20,000 for our product to help women with breast cancer in just three weeks,” said Richmond entrepreneur Michelle Logan. “Crowdfunding makes it possible for anyone – not just entrepreneurs like me – to have a good idea and turn it into a viable business.”
“I started my first company in a one-bedroom apartment in Virginia Beach and after years of work it became one of the fastest growing IT companies in the country,” said Del. Glenn Davis (R-Virginia Beach). “Being able to find funding in those first years when an entrepreneur is just starting out is critical to the success of their business. This legislation widens the audience of potential investors, giving startups a stronger opportunity to succeed.”
“Making easier for Virginians to invest in startups in the Commonwealth will position us for long-term job creation,” said Del. Chris Head (R-Roanoke). “This legislation will help us invigorate our private sector business community and cultivate the next generation of entrepreneurs in Virginia.”
Del. Joseph Yost (R-Pearisburg) said, “This legislation has the potential to unleash millions of dollars of investment in promising new Virginia companies. It will help Virginia continue to be the best place in the country to start or grow a business.”
Nicole Riley, State Director of the National Federation of Independent Business, said, “This legislation is a win-win for Virginia small businesses and investors. It gives entrepreneurs another tool to raise startup money, provides established small business owners another financing option to expand and gives investors in Virginia another incentive to help more new and small businesses succeed in the Commonwealth.”
House Bill 1360 creates an exemption from some of the requirements of the Securities Act for certain businesses to be able to more easily take advantage of the benefits of “crowdfunding.” The issuer of the security must be a for-profit business entity formed under the laws of the Commonwealth.
The exemption would apply to only the first $2 million raised per year and the business could not raise more than $10,000 from any single purchaser unless the purchaser is an accredited investor as defined by 17 C.F.R. § 230.501.