FOR IMMEDIATE RELEASE
Contact:
Tim Robinson
(734) 476-3389
Tim@LenaweeNow.org
Crowdfunding Bill Now Law
Lenawee County Proud to be the Birthplace of Michigan Crowdfunding
Michigan’s House Bill HB 4996, introduced by State Rep. Nancy Jenkins, was signed into law (Public Act 264) by Governor Snyder as reported by the State on December 30, 2013. This law gives all Michigan residents an inclusive, simple, and safe way to invest in local businesses, and provides a way for Michigan businesses to raise funds from any Michigan citizen. The practice is known as “crowdfunding.”
The existing federal SEC regulations make it almost impossible for small businesses to receive investment from “non-accredited” investors. This classification of investor is defined as individuals with less than $1 million of net worth or an annual income of less than $200,000. Approximately 97% of Americans fit this definition. Thus, a great deal of potential investment money is left out of the market.
This law changes that, at least for Michigan-based companies and investors. PA 264 legalizes crowdfunding, the practice of funding a project or venture by raising small amounts of money from a large number of people. Specifically, it uses an exemption in the federal law that allows non-accredited individuals to invest in companies that are based in the same state that the non-accredited investor lives in. “This new law is going to reinvigorate Michigan’s entrepreneurial spirit. We’re looking forward to an exciting new year as we know of several ventures just waiting for the opportunity to crowdfund,” said Jim Van Doren, Executive Director of Lenawee Now.
Lenawee Now is proud of the grassroots effort that started in Lenawee County with Chris Miller, Downtown Development Authority and Economic Development Director for the City of Adrian, and State Rep. Nancy Jenkins, District 57. Rep. Jenkins adds to Van Doren’s enthusiasm: “I’m excited that crowdfunding in Michigan started right here in Lenawee County. This new law will open opportunities for Michigan residents to invest in Michigan ideas and help spur our economy.”
According to Miller, the core motivation for the law was a presentation by New York Times best-selling author Amy Cortese, author of Locavesting. Cortese came to Adrian in fall 2012, and talked about how local communities could build stronger economies by using creative ways to help fund existing and new small businesses. “The idea that really resonated was crowdfunding,” Miller said. Working with small businesses and entrepreneurs, it’s the accumulation of capital that presents the greatest challenge; crowdfunding offers a creative and inclusive method to raise funds that is particularly applicable to local businesses and entrepreneurs.
In Spring 2012, Miller took the idea to Michigan House Representative Nancy Jenkins. Rep. Jenkins saw the possibilities and promise of crowdfunding, and acted on it, which ultimately lead to the creation of HB 4996 by her lead legislative aide, Andy Buss. She and Andy worked with her colleagues in the House and Senate, and with supporters throughout Michigan. The bill received overwhelming bi-partisan, urban and rural support. “This is government working at its best, and the state owes a debt of gratitude to Rep. Jenkins,” stated Miller.
PA 264 is Inclusive, Simple and Safe
Non-accredited investors can invest up to $10,000, in a single crowdfunding campaign. In addition, the law is designed to ignite the small business community. Businesses or entrepreneurs with no audited financials may raise up to $1M from non-accredited investors; for businesses with audited financials the cap is $2M. The law also establishes a series of robust checks to safeguard investors.
PA 264 promotes Economic Diversity
As cities in Michigan begin to rebound from the economic recession, they are increasingly in need of strategies to diversify their economic base. Crowdfunding makes it possible for a vast array of existing and new local businesses to raise capital, get off the ground and start to create jobs in their community.
PA 264 is about Michigan Investing in Michigan
With this law, Michigan will be among the first wave of states to bypass Federal inaction and provide alternative financing options that help Michigan businesses and investors alike.
About Lenawee Now
Lenawee Now is a non-profit organization dedicated to economic and business expansion throughout Lenawee County. By attracting new businesses, helping to grow established businesses, and supporting entrepreneurial endeavors in Lenawee, Lenawee Now is creating an economically viable and vibrant region. In addition to business attraction, retention and start-up activities, Lenawee Now provides critical services to support business growth including access to funding sources and talent enhancement. Learn more at www.lenaweenow.org
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