Entrepreneurs and small businesses play a key role in fostering innovation and creating new jobs within North Carolina’s rapidly expanding economy. To access the capital needed to launch a new business, entrepreneurs are increasingly looking at new capital-raising techniques such as crowdfunding.
Traditional business investment opportunities have generally been offered through professional broker-dealer firms and investment advisors who must recommend investments based on a limited range of criteria. Crowdfunding gives individuals more freedom to choose their own investment opportunities through online funding portals which advertise investment opportunities and coordinate the transaction between the investor and issuer without providing investment advice.
In addition to giving new opportunities to people, particularly middle class Americans who do not have access to professional broker-dealers or investment advisors, crowdfunding provides a unique way to encourage locally-supported, innovative investments in North Carolina businesses. As such, the NC Chamber strongly supports legislative efforts to broaden access to crowdfunding opportunities for North Carolina investors in SB 481: Providing Access to Capital for Entrepreneurs and Small Business (NC PACES). Senate Bill 481 is a balanced bill that provides for a commonsense way for businesses to access capital while providing clear and transparent guidelines to protect investors and businesses alike.
In addition to the standalone crowdfunding bill, a pair of comprehensive economic development companion bills introduced by the House and Senate last week (SB 826/HB 1090: Prosperity & Econ. Opportunity for All NC Act) contain provisions to establish North Carolina crowdfunding.
The NC PACES Act allows individuals to invest $5,000 in North Carolina small businesses without registering the investment as a formal security. Small investors have more options; small businesses have better access to capital. Over thirty states already have similar intrastate crowdfunding measures in place. In fact, most of these 30+ states used model crowdfunding legislation from North Carolina to construct their own laws – legislation that has yet to pass in North Carolina!
We are encouraging legislators support the NC PACES Act and expand access to capital for entrepreneurs and small businesses. The Chamber also encourages support for The Prosperity & Economic Opportunity for All NC Act, which contains a number of other measures to help grow North Carolina’s economy and further improve our state’s ability to compete for jobs. We will continue to update you on those measures and the progress of the bill as session advances.
Gary J. Salamido
Vice President, Government Affairs
North Carolina Chamber