Minnesotans are now able to look to their friends and neighbors for small business financing through MNvest, a state program embracing the growing crowdfunding epidemic. Once, this type of investing was classified as illegal under the Securities and Exchange Act of 1932, according to Twin Cities Business. The Jumpstart Our Business Startups Act of 2012 adjusted those rules, and Minnesota passed MNvest into law in 2015, but rulemaking changes and delays meant fundraising campaigns weren’t officially started until December of 2016.
MNvest allows Minnesotans to invest in local businesses, the legislation limits investment to companies and investors within the state. Twin Cities Business reports that several companies that signed up with MNvest have found varying levels of success. Torg Brewery, owned by Debbie and David Torgerson and scheduled to open in 2018, looked for $600,000 through MNvest, and will end its funding timeframe with more than $200,000. The owners so far have been pleased with the process.
“We think getting local money is the best, especially if you’re trying to build a community,” David Torgerson told Twin Cities Business.
Two obstacles still remain for the program, hidden costs and awareness. One of MNvests co-founders, Zach Robins, suggested that businesses should budget around $30,000 for legal fees and compliance costs. The issue of awareness is harder to quantify and could be more difficult to overcome. Twin Cities Business points out that investors won’t be attracted to the service without exciting businesses to invest in, and businesses won’t spend time looking for crowdfunding money if investors aren’t engaged in the program.