State Securities Commissioner OKs Regulations For Colorado Crowdfunding Act
The Colorado Crowdfunding Act, approved earlier this year by the state legislature and signed by Gov. John Hickenlooper, was formally approved on Wednesday by state Securities Commissioner Gerald Rome, according to the Denver Business Journal. With the passage of the act, Colorado became the 24th state to have a law allowing “non-accredited investors to make small equity investments in a privately held business in the state using the Internet.” Prior to the new regulations, only Colorado residents earning at least $200,000 annually with a net worth of at least $1 million were able to provide such investments. Now, Colorado residents will be able to invest as much as $5,000 in a small business. Colorado Division of Securities corporate finance director Jared Ertle explained the new regulations during two meetings earlier this month with state attorneys and entrepreneurs. He explained that unlike crowdfunding websites Indiegogo and Kickstarter, the state website will deal in securities.
What Happens Next
The act goes into effect on August 5 across the state. Any Colorado equity crowdfunding sites will then be registered with the state Securities Commission and listed on the state’s Division of Securities website.
What This Means For Small Businesses
Denver area small business owners should view the passage of crowdfunding legislation a positive step for the small business community, as the measure provides a new potential opportunity for businesses to raise capital. Small businesses currently without easy access to funds through traditional means may particularly benefit from this legislation, as they will be able to attract a broader range of investors.
Additional Reading
NFIB noted that Arizona recently enacted crowdfunding legislation.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.
