The Oregon crowdfunding rule went into effect on Jan. 15, 2015, allowing small businesses and startups to raise money through small cash transactions made by non-accredited investors.
Crowdsourcing for funds isn’t new —platforms like Kickstarter and Indiegogo have been used to successfully fund The new rule will apply to small Oregon business, and is expected to add over $900 million in fresh capital to economy.
The United States Congress passed the Jumpstart Our Business Startups (JOBS) Act in 2012, giving states the go-ahead to craft their own regulations for crowdfunding. So far, over 20 states have legal regulations in place for crowdfunding investments. The U.S. Securities and Exchange Commission is still drafting guidelines for a federal framework.
However, before Oregon would-be investors and entrepreneurs begin, there are some rules to understand. Here are six things to know about crowdfunding in Oregon.
1. To invest in a in business in the state before, you had to be an accredited investor. This called for a meeting a number of legal criteria, such as having one million dollars.
2. Although a business can ask anyone to invest now, there are limits as to how much can be acuminated by crowdfunding. A single investor cannot put more than $2,500 towards one investment.
3. Crowdfunding a business is not simply donating money to fund a project. Investors will be dealing with equity and securities—and will get real returns on their investments.
4. With the new crowdfunding rule comes an online platform by Hatch Innovation for businesses to post investment proposals. The owners can craft business plans that match their needs, while investors can search for proposals that interest them or work best for them. Amy Pearl, founder of Hatch Innovation, calls this compatible capital—where both sides of the deal can pick a good fit to increase capital.
5. Although other states may have their own crowdfunding laws, each one is unique in its outlines. Oregon’s rules only apply to Oregon. Only business registered in Oregon can participate in crowdfunding and only Oregon residents can invest.
6. To help make sure investors and businesses make the most of crowdfunding, educational material will be available to make sure people know what they are doing.
Each investment deal will be crafted differently, requiring investors to review financial documents, and acknowledging the venture is an investment and could be risky. There is a limit to how much capital businesses can gather as well. Companies can raise up to $250,000 to go towards a new business or an existing operation. Now, anyone who agrees to the business terms is eligible to invest their capital in a business.
Review the current Oregon Crowdfunding Exemption:
Here are just a few features for Oregon crowdfunding included in the CrowdForce platform software:
• State residency self-verification
• Driver’s license upload for verification
• Setting funding limits for non-accredited investors
• Allowing accredited investor participation
• Complete and simple document signing and management
• Integrated ACH payments
• Plug in your state escrow account
• Plugin in your broker services for accredited investments
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