Well that never happened. At least not yet — for a number of reasons (depending on who you ask and believe) that ultimately point to the Securities and Exchange Commission (SEC). To put it lightly, crowdfunding remains in a Federal limbo.
Offering trinkets and the right to pre-purchase a product is ideal for consumer-facing companies, but what about crowdfunding an entire business or enterprise application? Giving entrepreneurs the ability to directly advertise and raise their capital online in exchange for equity or debt could offer overdue lubricant.
So rather than wait around for the Federal Government and its SEC brethren to finalize regulations, a number of states are taking matters into their own hands with custom legislation for businesses that want to crowdfund via securities in their state’s respective jurisdiction. After all, states do have the legal power to craft their own securities laws relating to securities offerings confined to that state’s borders.
Attorneys at Minneapolis law firm Winthrop & Weinstine have proposed a campaign called MNvest to bring Minnesota up to speed on equity crowdfunding. Zach Robins and Ryan Schildkraut suggest that as many as 15 different states have already pursued crowdfunding by their own means and similarly on their own terms.
The main purpose of MNVest is to enable early stage startups (technology and otherwise) to legally advertise investment opportunities to all Minnesota residents and allow interested investors to participate in the risks and rewards of equity ownership — essentially to provide wider, cheaper, and faster access to startup funding for entrepreneurs.
“We want Minnesota to join the club,” Robins says, “Equity crowdfunding for non-accredited investors (the 99%) remains the biggest barrier for startups who want to legitimately expand their funding options.”
With MNVest, any Minnesota company could advertise to Minnesota residents and raise capital via the Internet on their own website or that of a registered 3rd party. To do so, they are introducing legislation during the upcoming season which carves out an additional exemption under Minn. Stat. 80A.45 § 202.
They have provided a draft copy of the legalese under the condition it’s clearly communicated just how raw and unrefined the wording and parameters are at this stage. (see: v1 working draft on Github: https://github.com/mnvest/mn-equity-crowdfunding-legislation/blob/master/draft-bill.txt)
MNVest is launching this month with grassroots education and entrepreneurial awareness measures followed by further support from special interest groups. Overall, it’s refreshing to see regulatory initiatives in Minnesota transcend the cries for taxpayer-funded government handouts.
The draft bill has found an early senate sponsor in Terri Bonoff (DFL-44) and will be distributed to the Minnesota State Bar Association Business Law section for review. There’s an informational meetup tonight @6pm featuring entrepreneur Joseph Barisonzi and we’ll also be reporting along this story develops.