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* But I like it…
State Representative Tom Demmer (R-Dixon) has filed legislation that would give entrepreneurs and startup founders a kick-start into the market. House Bill 3091 allows the use of intrastate crowdfunding, a new investing concept that is capable of generating greater access to capital, allowing for entrepreneurs with ideas to make them into reality.
“Crowdfunding will be the way of the future and is the next step in evolution for startups and small businesses,” said Rep. Demmer. “There are a lot of entrepreneurs out there who have great ideas to start a business, but have no capital. This bill will give those people the opportunity to bring new and innovative business ideas to Illinois.”
The legislation creates an exemption from certain filing and registration requirements under the Act for intrastate securities offerings that meet certain conditions.
“We have to be competitive with surrounding states,” said Rep. Demmer. “Wisconsin, Indiana, and Michigan have already enacted this legislation, while Missouri and Kentucky currently have bills drafted. We have the opportunity to join these states to spur innovation, economic activity, and small-business job creation.”
The legislation is here.
…Adding… Some folks are a bit unclear on this concept. Currently, startups can only legally raise donations through online services like KickStarter. This bill allows contributors to become investors.
posted by Rich Miller
Thursday, Feb 26, 15 @ 1:52 pm
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More of this please.
Comment by Biliary Sludge Report Thursday, Feb 26, 15 @ 2:00 pm
People in Illinois have been raising money of investing through sites like kick starter for some time now.
Is this some technical legislation to catch up, after the fact?
Comment by Wordslinger Thursday, Feb 26, 15 @ 2:04 pm
Already being done. Is SEC cracking down or something?
Comment by walker Thursday, Feb 26, 15 @ 2:06 pm
Why so slow Demmer?
Does BVR like or does he prefer to limit biz bucks backing to his big bank/hedge fund pals
Does Citadel have a position?
Comment by Anonin' Thursday, Feb 26, 15 @ 2:07 pm
===Already being done===
No, it’s not. You can only raise donations now. This bill would allow contributors to become investors.
Comment by Rich Miller Thursday, Feb 26, 15 @ 2:08 pm
Rich, let me know if you ever want to sell some Capitol Fax stock.
Comment by 47th Ward Thursday, Feb 26, 15 @ 2:10 pm
Michigan has done this
Comment by Anon Thursday, Feb 26, 15 @ 2:15 pm
Just proves you don’t have to invent the wheel or fire, just be open to using them. Good bill.
Comment by A guy Thursday, Feb 26, 15 @ 2:33 pm
There will probably be other bills put up by Reps that mirror our neighbors. The dems only want to regulate and stiffle ideas. Keep going Rich. TX
Comment by scott aster Thursday, Feb 26, 15 @ 2:34 pm
Not a bad idea. It’s a little late but when is governin(g) timely?
Comment by Jorge Thursday, Feb 26, 15 @ 2:39 pm
This isn’t being done and is a great bill. Like others have said, you can only raise donations on kickstarter, which is great. I had a friend raise $330k on his kickstarter just because people liked his idea and wanted to see the world with his product in it. Who knows how much he could have raised if he was selling points on his company to investors. He could have raised a million which is likely a lot closer to the working capital he needed to get off the ground and start production on his invention KeySmart. Crowd funding is great but certainly limited when you have to rely on people giving you donations with no expectation of return. This will open up doors for lots of people with great ideas.
Comment by Anonymous Thursday, Feb 26, 15 @ 2:51 pm
==- scott aster - Thursday, Feb 26, 15 @ 2:34 pm:==
The word you are looking for is stifle. The bill was filed on Tuesday and assigned to the Rules committee yesterday. There is no stifling of the bill going on. Grow up.
Comment by Precinct Captain Thursday, Feb 26, 15 @ 2:53 pm
The details are (of course) different, but this podcast discusses crowd-investing and the limitations on who can take part: http://gimletmedia.com/episode/7-how-listeners-become-owners/
– MrJM
Comment by MrJM Thursday, Feb 26, 15 @ 2:57 pm
Thanks Rich. Good bill.
Comment by walker Thursday, Feb 26, 15 @ 3:10 pm
Irrelevant bill at this point, right?
Since the SEC rules on crowd investing aren’t out yet?
Comment by crazybleedingheart Thursday, Feb 26, 15 @ 3:16 pm
Thanks Rich. I actually started looking in to this after a post you did about an Illinois Policy Institute article a few months back.
Rep. Carol Sente is working on a similar bill too and we’re going to work together on something going forward.
Comment by TD Thursday, Feb 26, 15 @ 3:24 pm
== scott aster - Thursday, Feb 26, 15 @ 2:34 pm:
==The dems only want to regulate and stiffle (sic)ideas. ==
Oh, like the repubs are only wanting to regulate and stifle our bodies? Step back, buddy. Walk away carefully.
Comment by Midwest Mom Thursday, Feb 26, 15 @ 3:29 pm
There probably is some merit to this idea and definitely worth a closer look.
However, if this has been proposed and passed in some other states, I am wondering if this is the workings of ALEC or some other agenda/issue driven organization targeting legislation at the state level.
That is not to say that this proposal should not be considered, but many outside groups - on both sides - have their own agendas.
If this could help our state I am all for it, but I have to wonder if there is another entity pulling the strings?
Comment by Illini Thursday, Feb 26, 15 @ 3:35 pm
Like the idea. The SEC and Federal regulators will hate the idea. Trial lawyers will have to figure out, if they like or hate the idea.
Comment by Apocalypse Now Thursday, Feb 26, 15 @ 3:50 pm
This is a great idea. Need to look in to it more, but it’s almost like getting back to what investing was really supposed to be all about. Buying in on producing ideas and products and helping to create companies. Investing these days seems like it’s just giving money to your broker on Wall Street who just shuffles things around while he makes money.
Comment by Anon Thursday, Feb 26, 15 @ 3:56 pm
With all due respect to Rep. Demmer, while I can appreciate his enthusiasm for the crowdfunding concept, the language in the crowdfunding bill he filed (HB 3091) was NOT his, it was MINE and was used without notice to, or permission from, me at all. I have been drafting this bill for the last year and this particular version has been posted on my website (www.illinoiscrowdfundingnow.com) and my blog (www.crowdfundinglegalhub.com) for months. I have since been working with the SBAC and the Illinois Secretary of State to draft a revised version of this bill which will be filed by a different representative shortly.
Comment by Anthony Zeoli Thursday, Feb 26, 15 @ 4:12 pm
Rep. Demmer -
a) what kind of equity crowdsourcing is IL currently restricting, and
b) how would your bill make it happen?
Comment by crazybleedingheart Thursday, Feb 26, 15 @ 4:13 pm
Huh. Then I guess I’d ask the same question of you, Mr. Zeoli.
Comment by crazybleedingheart Thursday, Feb 26, 15 @ 4:16 pm
@crazybleedingheart The proposed bill will create an exemption to allow Illinois companies to seek investment from both accredited (e.g. high net worth individuals) AND non-accredited residents of Illinois. Currently no such process exists (at least no easy one) in Illinois which would allow for investment by non-accredited residents.
Please let me know if that does not answer your question.
Comment by Anthony Zeoli Thursday, Feb 26, 15 @ 4:22 pm
Once the bill is passed, IL companies will still not be able to raise money from non-accredited investors under SEC rules, correct?
Comment by crazybleedingheart Thursday, Feb 26, 15 @ 4:32 pm
@crazybleedingheart No that is not correct. The bill takes advantage of what is called an “intrastate exemption.” Basically because an IL company is only soliciting investments form IL residents (i.e. all of the transactions occur within the state) the state is permitted to regulate the transactions. Accordingly, if passed, Illinois companies would be able to solicit investment from non-accredited investors who reside in Illinois.
Comment by Anthony Zeoli Thursday, Feb 26, 15 @ 4:34 pm
Ah, of course. IL investors in IL companies.
Thanks!
Comment by crazybleedingheart Thursday, Feb 26, 15 @ 4:46 pm
In reference to my earlier comment regarding Rep. Demmer, I would like to note to everyone that Rep. Demmer took the time to personally call me regarding the matter in order to apologize for any misunderstanding there may have been. He clarified that it was solely out of his support for the concept that he filed the bill and that he believed he was furthering, not hindering, my cause. I truly appreciate his taking the time to talk to me on the matter and I am glad to have his support going forward.
Comment by Anthony Zeoli Thursday, Feb 26, 15 @ 5:17 pm
Sounds good. We need a legislature focused on expanding our economy rather than encouraging envy.
Comment by Downstate Illinois Thursday, Feb 26, 15 @ 5:28 pm
So who exactly are non-accredited investors? And I do admit that I did not read the proposed leglislation.
Comment by Illini Thursday, Feb 26, 15 @ 5:53 pm
A non-accredited investor is any person/entity who does not fall under one of the classes of “accredited investors” under Rule 230.501 http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=8edfd12967d69c024485029d968ee737&r=SECTION&n=17y3.0.1.1.12.0.46.176
For individuals, basically person making less than $200k per year and/or have less than $1M in net worth (excluding primary residence)
Comment by Anthony Zeoli Thursday, Feb 26, 15 @ 6:00 pm
Thanks Anthony - and I, unfortunately, am a non-accredited investor.
Comment by Illini Thursday, Feb 26, 15 @ 6:12 pm
This is one of the few times I am in agreement with the IPI. Hope that association doesn’t kill it
Comment by Illinois Manufacturer Thursday, Feb 26, 15 @ 10:18 pm
It’s like the Great Depression never happened.
Comment by Jerry 101 Thursday, Feb 26, 15 @ 10:33 pm
Money? Just Ask Gov. 1% Billionaire Bruce and his buddies. Guy makes $29,000 and hour and just caught a $750,000 tax break. I’m sure he would reach deep into his Carhartt jacket to pull out a shiny new nickel for you and your start up. Shaking up Springfield and the piggy banks of poor people, smashing them open is his life’s work!
Comment by friday fun facts Friday, Feb 27, 15 @ 5:17 am