The JOBS Act, with support in Congress, was signed into law by the President in April 2012. The technology and business communities widely supported the legislation.
Among other provisions, the act legalizes equity-based crowdfunding and raises the cap on private shareholders from 500 to 2,000.
The Kentucky legislature proposed a bill calling for the creation of a Kentucky crowdfunding platform for Kentucky businesses that will make it easier for average residents to invest in businesses that look promising. It would allow people to invest up to $10,000 while helping businesses raise up to $2 million.
Tennessee and Indiana both have passed similar laws.
In anticipation of the Kentucky crowdfunding bill, local investors formed the Commonwealth Crowdfunding Committee (C3) to discuss issues related to equity crowdfunding. The C3 website features resources for both investors and entrepreneurs. Kentucky representative Steve Riggs announced in 2014 that he is filing new Kentucky crowdfunding legislation to bring this capital raising model to this growing, entrepreneurial state. The General Assembly will reconvene in January but the bill is up for discussion now.
Riggs revealed that similar legislation went into effect in Indiana in 2014, which allows individuals to invest up to $5,000 helping businesses raise up to $2 million annually. He also detailed that there will be built-in safeguards in the Kentucky crowdfunding bill to protect investors from fraud or if business plans fall through.
There has been several studies conducted that show more Kentucky residents are starting their own businesses. The governor recently noted that the Kentucky had improved dramatically and the Kauffman Foundation Index reported it was the fifth top state for entrepreneurial activity through 2014.
Kentucky has leaped from the bottom of the charts in entrepreneur ranking (49th place) to 4th in the country – a significant achievement. Five factors are utilized to formulate the overall state rankings:
establishment growth per capita
business formation rates
patents per 1,000 people
income levels for non-farm proprietors