Florida Legislators passed a new crowdfunding bill during the 2015 legislative session. What is crowdfunding? You're probably already familiar with some of the known crowdfunding websites like Kickstarter, Crowdfunder, and Indiegogo. Generally speaking, crowdfunding allows new businessses to use the internet in order to collect small sums of capital from a large number of individuals in order to finance the new business venture. Typically, investors provide money to the new business in return for products or perks, or for an ownership stake in the form of equity. When business sell ownership stakes online, the investors become owners or shareholders and have the potential to earn a financial return.
The concept behind crowdfunding is that it ignites entrepreneurship by creating sources of funding beyond traditional high net worth investors. In effect, the new Florida crowdfunding law (Section 517.0611 cited as the "Florida Intrastate Crowdfunding Exemption") means that a Florida investor no longer needs to be “accredited” (i.e., a higher net worth individual) in order to invest in a new Florida business. The new law allows Florida businesses to offer or sell securities to Florida investors through state-registered crowdfunding platforms (e.g., websites or "intermediaries" that must meet their own set of legal requirements) so long as the businesses meet and comply with various capital, disclosure, reporting, transaction and qualification requirements/limitations. The total amount that may be invested in any business is based on the annual income and net worth of the investor.
The enrolled version of Florida's crowdfunding law (42 pages) is available for review here. The new law takes effect on October 1, 2015. If you are a Florida business, Florida investor or crowdfunding platform/website seeking legal advice on the procedures and requirements set forth in Florida's new, comprehensive crowdfunding law and/or seeking legal representation in connection with anticipated litigation that is likely to spawn from the new law, please contact Joel Ewusiak for assistance.