A bill that would allow private businesses in New Jersey to crowdfund through Web portals has received final legislative approval and is now heading to Gov. Chris Christie's desk for consideration.
Under the measure, businesses can use the portals to secure total investments of up to $1 million in $5,000 increments from New Jersey-based, unaccredited investors.
The bill utilizes a similar business model to that of Kickstarter, a popular online crowdfunding site. But while Kickstarter only allows entities to offer investors gifts of appreciation for their contribution, the New Jersey bill would permit companies to offer investors shares of equity in return for their investments.
“At a time when conventional sources of financing are scarce, this legislation will help New Jersey’s innovators seek private capital from the investing public to develop their products or services right here in our state,” said state Sen. Joe Kyrillos (R-Middletown), a primary sponsor of the bill. “Crowdfunding will level the playing field for future employers, giving those without access to Wall Street a chance to gain startup capital quickly and grow their business with the support of the community.”
According to Kyrillos, the measure will not cost taxpayers anything and will provide a boost to New Jersey’s small business owners, which account for more than 90 percent of all in-state employers.
“We grow jobs and opportunities for people here by eliminating opportunity-crushing regulations and antiquated roadblocks to ingenuity and economic revitalization principally driven by our state’s small businesses,” Kyrillos said. “Entrepreneurs in New Jersey deserve the same opportunities to thrive as innovators in other states who have turned several thousand dollars in online crowdfunding investments into thriving businesses with dozens of employees.”
Kyrillos first introduced the bill in 2013. Similar measures have been passed in states like Georgia, Wisconsin, North Carolina and Kansas.
“Unaccredited investors have always been able to risk capital in the public markets and now they can as well in private companies, small businesses and entrepreneurial startups,” Kyrillos said.
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