Intrastate Crowdfunding

Transcription

1 Intrastate Crowdfunding Increasing community investing in Alaska January 10, 2018 Penny Gage Business Development Officer Division of Economic Development

2 Division of Economic Development The Division of Economic Development supports the growth and diversification of Alaska s economy through business assistance, financing, promotion, and public policy. The Division works closely with industry leaders, allied agencies, and economic development organizations across the state, including the state designated Alaska Regional Development Organizations (ARDORs).

3 Fundraising Mechanism Friends and Family # of Investors Max amount you can raise Can investors be non Alaskans Can I pay sales commission? Can I advertise? Business Info Release Required 10 or less No maximum Yes No No No No State/Fed Fees Friends and Family 25 or less No maximum NO must be Alaskans No No Yes No Intrastate Crowdfunding No maximum $1 million max. $10,000/person NO must be Alaskans Yes, if licensed Yes (limited) Yes $150 Small Offering No max. Accredited investors only No maximum Yes Yes Yes Yes $50 Fed Covered Securities (506)(b) Up to 35. (Don t have to be accredited) No maximum Yes Yes No Yes $600 Fed Covered Securities (506)(c) No max. Accredited investors only. No maximum Yes Yes Yes Yes $600 3

4 Community Investing When locally owned businesses thrive, your community thrives along with them. They are key to community wealth and economic health. Alaskans can now participate in their state s economy, investing in local businesses and innovative start-ups through intrastate crowdfunding. 4

5 Community Investing

6 What is Crowdfunding? Crowdfunding is gifts/contributions by many toward success of a business or cause Contributors get a thank you gift, such as a sample or other small reward in recognition of their gift (Kickstarter, GoFundMe, Indiegogo) VERSUS Equity or Debt Crowdfunding Investors provide cash expecting a return on that investment In 2016 the Legislature passed the Innovating Alaska Act, which allows intrastate crowdfunding Alaska businesses can raise up to $1 million from individual Alaskans up to $10,000 per person in a 12-month period 6

7 Baranof Island Brewing Co. in Sitka 7

8 Alaska Intrastate Crowdfunding Innovating Alaska Act Regulations $1 million maximum in a 12-month period. $10,000/person (unless they are an accredited investor) Minimum target amount escrow account Investors must be Alaska residents (license or ID card, voter registration, property tax records) Any type of for-profit corporation can participate (LLCs, corporations, etc.) A valid Alaska business license is required $150 non-refundable filing fee Marijuana companies may participate, but must meet more stringent residency requirements Companies may advertise in print, online, website, Facebook, etc., however may only target Alaska residents. Pre-approval required. 8

9 RISKS for Investors and Businesses For Investors: Investing, especially in startups, can be particularly risky, and as such, several protections are in place to protect both businesses and investors: Investment cap of $10,000 per company Warnings in offering documents that investing carries certain risks Requirement that companies use an escrow agreement to hold funds until a minimum target amount is reached Keeping investing within Alaska and requiring companies to provide each investor with the name and physical address of the company, officers, directors, and controlling persons, along with descriptions of their qualifications Realistic expectations Get to know the business! For Businesses: Realistic expectations Risk disclosure Honesty Competent legal assistance. What are implications for your business? 9

10 Resources Visit the Alaska Division of Banking and Securities website Click on Securities Home Page from list on the right See Crowdfunding Resources on home page Visit the Division of Economic Development s website Click on Intrastate Crowdfunding from the list on the right 10

11 Prospectus Template 11

12 FAQs 12

13 For more information contact: DCCED - Division of Economic Development 550 W. 7th Avenue, Suite 1770, Anchorage (907) penny.gage@alaska.gov DCCED - Division of Banking and Securities 550 W. 7th Avenue, Suite 1850, Anchorage (907) securities@alaska.gov 13