By Kristin Goosen Fergus Falls Daily Journal, Minn.
WWR Article Summary (tl;dr) Since the Jumpstart Our Business Startups (JOBS) Act was passed in 2012, crowdfunding platforms like Kickstarter, Indiegogo and Fundable have been able to thrive. The act's passage eased federal regulations and allowed individuals to become investors.
Fergus Falls Daily Journal, Minn.
For startups, finding shareholders and investors can be essential to the success of the business.
"Many businesses die from lack of funding," David Duccini , CEO of Silicon Prairie Portal and Exchange, said at Monday's meeting of the Fergus Falls Area Entrepreneurs and Creators.
In the third meeting for the group, Duccini and Jade Barker, a consultant for Silicon Prairie, were invited to present on MNvest and how it allowed them to create a crowdfunding portal company. The MNvest law has made the availability of this kind of service legal and it has the ability to change the way currency can be circulated and invested and how this can affect businesses.
The presentation was based on the idea of how to create equity, and "the democratization of capital," as Duccini said.
Getting to the point in which this kind of crowdfunding is possible has been a long road, and Duccini outlined why this was so in his presentation.
From about 1933-2012, not much was changing in the investment sector. Finding investors was limited to basically friends and family and your ability to seek out benefactors. No public share promoting was authorized and it was all under tough regulations that limited what a small business could do. The fees associated with lawyers, brokers, escrow and the plethora of other expensive hoops to jump through didn't promote a manageable path to success for the majority of people trying to start a company.
"Not much was happening and the rich were getting richer," Duccini explained.
Then, in 2012, the Jumpstart Our Business Startups (JOBS) Act was passed to encourage small businesses. It eased federal regulations and allowed individuals to become investors.
Since the act's passage, crowdfunding platforms like Kickstarter, Indiegogo and Fundable have been able to thrive. "In Kickstarter, you're investing in a dream and you're getting something like a t-shirt for donations," Duccini said. This is in contrast to the equity crowdfunding that Silicon Prairie deals in, which is when investors are buying pieces of the company, not just a souvenir from the company. The JOBS Act opened the doors for something like MNvest, a law that has similar incarnations in 36 states. "MNvest is the law that makes it legal to raise capital from the public in Minnesota by issuing stock or selling debt to anyone by promoting the offer publically, including crowdfunding on the internet," Duccini's presentation stated. For MNvest, the issuers, or the individual investors or businesses investing in the business, must have a main office in Minnesota. This law is specifically limited to those within the state. Another limitation is $10,000/deal, unless the investor is an angel investor or a venture capitalist. A major point Lois Josefson, one of the founders of FF Area Entrepreneurs and Creators, was that of the angel investor tax credit. Right now, angel investors can get a tax credit, but this benefit will go away soon. ___ (c)2017 the Fergus Falls Daily Journal (Fergus Falls, Minn.) Visit the Fergus Falls Daily Journal (Fergus Falls, Minn.) at www.fergusfallsjournal.com Distributed by Tribune Content Agency, LLC.