Del. Scott Taylor’s (R-Virginia Beach) legislation to make it easier for entrepreneurs to raise capital through “crowdfunding” passed out of the Commerce and Labor Committee Tuesday. The bill is expected to come to a vote before the full House early next week.
Speaking about the bill, Del. Scott Taylor said, “Crowdfunding is a recent innovation to help entrepreneurs get their companies off the ground and find the capital to grow. My bill would eliminate many of the regulatory stumbling blocks for a business looking to take advantage of the opportunity to solicit investments by crowdfunding. There is no doubt this bill will enable Virginians, investing in Virginia companies, to create jobs.”
Nicole Riley, State Director of the National Federation of Independent Business, said, “Small businesses and startups are the backbone of our economy and create well more than half of new jobs in Virginia. The NFIB, the Voice of Small Business in Virginia, supports this proposal to allow Virginians to invest in small businesses through crowdfunding websites. It would give entrepreneurs access to more financial resources and provide oversight that would give confidence to investors.”
Background on HB 1360 (Taylor): House Bill 1360 creates an exemption from some of the requirements of the Securities Act for certain businesses to be able to more easily take advantage of the benefits of “crowdfunding.” The issuer of the security must be a for-profit business entity formed under the laws of the Commonwealth.
The exemption would apply to only the first $2 million raised per year and the business could not raise more than $10,000 from any single purchaser unless the purchaser is an accredited investor as defined by 17 C.F.R. § 230.501.