Washington Legislature Passes Crowdfunding Legislation
March 17, 2014 by Paul Nyhan
Measure Now Goes to the Governor
The Washington state legislature embraced crowdfunding last week, passing legislation that would make it easier for companies to raise capital in small amounts and place Washington among only a few pioneering states that allow the new funding tool.
Overall, the bill, HB 2023, sponsored by Rep. Cyrus Habib, would give technology startups and other businesses a new way to raise funds. Under the bipartisan measure, a Washington business could raise up to $1 million a year from Washington investors by selling securities of relatively small value.
Today, Washington entrepreneurs often spend a lot of time trying to raise money, and plenty of good ideas never get developed because they never find it, according to Joe Wallin, one of the original proponents of the bill and a Seattle-based startup and corporate transactions lawyer.
“I think if you hear gripes about Seattle, one of them is that it can be really hard for startups to raise money, and that there isn’t enough investment capital being deployed here,” Wallin wrote in an email. “This bill should make it easier for businesses to raise money, and that should be a good thing overall for the economy.”
The bill is clearly focused on freeing up small investments. It would place caps on investments by individuals that mirror a federal crowdfunding law, according to Wallin. Companies, though, can’t use that federal law yet because the Securities and Exchange Commission has not released final regulations, he added. Under the Washington legislation, the Department of Financial Institutions would have to approve a securities offering before a company could sell shares.
The measure also would require businesses to disclose potential risks and release quarterly reports. Check out details of the bill, including other safeguards, here.
Now the legislation moves to Gov. Jay Inslee’s desk. The final version passed both the state House and Senate by overwhelming margins, 98-0 and 46-2 respectively. If the governor signs the measure it would place Washington among only a handful of states that have enacted crowdfunding laws.
You can support the measure by sending the governor an email encouraging him to sign the legislation. You can build support for the bill on Twitter under #crowdfunding and #hb2023, and by adding the governor’s Twitter accounts, @GovInslee and @WaStateGov.
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