The Scoop on Intrastate Equity Crowdfunding Exemptions

When its newly-passed legislation went live on June 1, Wisconsin became the 11th state since 2011 to pass its own intrastate equity crowdfunding exemption, allowing general solicitation of funds within state borders. These 11 states have all taken matters into their own hands as the Securities and Exchange Commission (SEC) continues to mull over Title III of the JOBS act, which could allow general solicitation to unaccredited investors on a national scale.

While the intrastate exemptions are not replacements for national legislation, in many states they are the next best thing. Organizations in large states with a large number of potential investors such as Florida, California and Georgia have been quick to make use of their own intrastate exemptions, and with strong results.

But they don’t work so well everywhere: those in smaller states stand to benefit the most from being able to seek investment out-of-state. In Kansas, as Forbes reports, fewer than 10 companies have utilized the legislation in its three-plus years on the books.

While they are not perfect, the intrastate exemptions have been showing firsthand that equity crowdfunding works, that it is safe for investors and that the market is ready for it. If Title III comes through as expected, we can only expect to see companies warm-up to the model even more, as the real potential impact of equity crowdfunding will finally come to light.

To learn more, take a look at the 506 equity crowdfunding system from Launcht.

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