MADISON, Wis. (5/28/14)--Wisconsin businesses will be able to raise money through Internet crowdfunding under a new law that takes effect June 1, and credit unions are among the financial institutions that can hold contributions.
The law, approved by the state legislature and signed by Gov. Scott Walker, allows a Wisconsin business to raise up to $1 million from state investors through crowdfunding portals. The amount can be increased to $2 million if the issuer has had an audit in its most recent fiscal year, and has provided the audit to prospective investors and the Department of Financial Institutions (DFI).
"This change could result in new opportunities for Wisconsin entrepreneurs to raise capital and launch new businesses, thereby creating jobs and helping the state's economy to grow," said Patricia Struck, DFI Division of Securities administrator. "As with any investment opportunity, we encourage consumers to do their homework in advance and make sure the investment is right for them."
To qualify for the state securities exemption, issuers must:
The new law also regulates Internet site operators used in crowdfunding. The Internet site operators must be organized under Wisconsin law and authorized to do business in Wisconsin. Businesses must also be registered with the state Division of Securities. Records of offers and securities sales must be maintained on the Internet site.