Kentucky Intrastate Crowdfunding Exemption Act passes in House committee

Crowdfunding-callA bill aimed at creating online crowdfunding investment opportunities in the commonwealth sailed through the House Banking and Insurance Committee this morning with unanimous support.

The Kentucky Intrastate Crowdfunding Exemption Act, aka HB 76, is sponsored by state Reps. Steve Riggs, D-31; Jerry Miller, R-36; and Brad Montell, R-58.

This long-awaited bill complements the federal JOBS Act, Title III, and makes it easier for businesses to crowdfund without having to wait on the SEC’s processes and other restrictions.

The Jumpstart Our Businesses Startup Act, or JOBS Act, had bipartisan support in Congress and was signed into law by President Barack Obama in April 2012. The tech, crowdfunding and startup 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 legislation proposes the creation of an online platform for Kentucky entrepreneurs that will make it easier for people to invest in business ideas that look promising, much like Kickstarter. 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.

crowdfunding logoIn 2013, in anticipation of this bill, local investors formed the Commonwealth Crowdfunding Committee (C3) to address issues related to equity crowdfunding. (Disclosure: Insider Louisville was one of C3’s sponsors.) Its website features resources for both investors and entrepreneurs.

The next stop for HB 76 is before the full House.