Exciting news from our friends east of Lake Washington came out last week! The City of Bellevue is developing a plan to launch a website that will take advantage of Washington’s new crowdfunding bill. The City’s goal is to provide local companies a new way to raise money from smaller, local investors.

What is crowdfunding?

As we’ve discussed in previous posts, equity crowdfunding allows companies to advertise to and raise investment from the “crowd,” i.e. the general public. This is significant because traditionally companies could only access capital from “accredited investors” (or high net-worth individuals) due to the SEC restrictions and compliance costs associated with raising funds from non-accredited investors.

With crowdfunding, non-accredited and accredited investors alike can invest in companies they believe…

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As of earlier this month, you can officially use crowdfunding to raise money in Washington for your small business. This new way of raising money allows you to publicly advertise to all investors that you are selling stock in your company. Traditional securities offerings restrict advertising and limit offerings to those investors who satisfy the income and net worth standards to qualify as an “accredited investor.” This new opportunity is different from platforms like Kickstarter because with Kickstarter campaigns you cannot offer stock in exchange for the donations. Instead, you give individuals “swag” (e.g. promotional merchandise) in exchange for their donations.

Crowdfunding is not yet available nationwide despite a section in the JOBS Act directing the SEC to enact crowdfunding rules…

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Kyle Hulten wrote recently on the iVLG blog about new developments to the JOBS Act. For those of you not familiar with the JOBS Act, here’s a summary of Title II (equity crowdfunding) and Title III (crowdfunding) of the act. In a nutshell, the Jumpstart Our Business Startups Act was passed to provide businesses easier access to a wider pool (the public, or “crowd”) of investors. As part of the JOBS Act, the SEC lifted the 80+ year old ban on general solicitation (i.e. public advertising) of securities offerings–private companies had not been able to advertise that they were seeking to raise capital from investors.

It has been a long road since the act was signed by President Obama in April…

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Last Friday, the Washington Senate passed an amended version of crowdfunding bill HB 2023. The bill passed through the Senate by a 46-2 vote. With only a few hours to spare on Friday afternoon, the Senate put the bill to a vote and it was passed by an overwhelming majority. What does this mean for small businesses in Washington? It means we’re one step closer to allowing small businesses to raise capital through crowdfunding, i.e. advertising your securities offering to the public and allowing the public to invest in your company for equity (a piece of the pie).

History of crowdfunding
Well before the passage of the JOBS Act on April 5, 2012, a group of entrepreneurs and investors began pushing the idea of…

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