‘Montanans may not have a lot of money, but we often have good ideas and a lot of friends’
HELENA, Mont. – Montana start-up businesses will be able to raise money through “crowdfunding” if a bill promoted by Montana Securities Commissioner Monica J. Lindeen becomes law.
House Bill 481, sponsored by Helena Rep. Chuck Hunter, would change the laws governing investments to allow so-called “crowdfunding,” – a way of generating start-up capital for businesses by soliciting low-dollar investments from large numbers of people. Crowdfunding is gaining momentum amongst the states and may become a major player in businesses development, totaling more than $5 billion in raised capitol worldwide in 2013.
“Montanans may not have a lot of money, but we often have good ideas and a lot of friends,” Lindeen said. “Crowdfunding puts those two things together. It’s like a barn-raising for good ideas, where many hands make the work light. But we need laws around crowdfunding to protect investors and lay out clear expectations for entrepreneurs.”
Crowdfunding is not possible under current Montana law, which was written before Internet-based fundraising became possible. Sixteen other states have considered such legislation – or already have crowdfunding laws on the books.
“By passing this bill and exempting crowdfunding from the securities registration process, you will be giving Montana companies greater and quicker access to capital,” Hunter said. “That can only help foster job creation and help Montana business, and that is good for Montana.”
Lindeen’s office is aware of Montana projects that failed to raise needed capitol because they were limited in the way they could raise money, putting Montana ‘s newest small companies at a disadvantage to those in other states.
Under Hunter’s bill, start-ups cannot raise more than $1 million through crowdfunding and they must solicit their investors only in Montana. The bill also lays out other guardrails for crowdfunding intended to protect the investors – and ensure the business owner doesn’t run afoul of any other laws.
The Senate Business, Labor and Economic Affairs Committee will take up HB 481 in a hearing this morning. Montanans can listen in here.