MERKLEY MEETS WITH SMALL BUSINESS ABOUT NEW OPTIONS FOR RAISING MONEY ONLINEMay 2, 2012
Portland, OR – Oregon’s U.S. Senator Jeff Merkley held a roundtable meeting at the Portland State University Business Accelerator today to discuss crowdfunding, a new option for businesses to raise capital online. Merkley wrote the CROWDFUND (Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure) Act which was recently signed by the President and allows entrepreneurs and small businesses to raise capital through online platforms. This new law also includes strong investor protections aimed at minimizing the risk of fraud and establishing a strong, healthy market.
“Crowdfunding is an exciting new opportunity for small businesses and startups across Oregon. They will have a new avenue to raise the funds needed to bring ideas to market,” said Merkley. “The internet has transformed almost every aspect of our life, and it’s important that we make sure our small businesses can take advantage of new tools too. This law will make sure entrepreneurs can use online tools to find investors, and make sure investors can put their money into exciting projects without worrying about getting ripped off.”
Normally, when a company seeks financing from the public it must register as a security with the Securities and Exchange Commission, providing detailed disclosures. The CROWDFUND Act provides an alternative to this process, allowing companies to raise up to $1,000,000 annually through crowdfunding on registered internet websites.
The law provides basic marketplace protections for ordinary investors seeking to take advantage of this new marketplace. Websites listing crowdfunding companies must register with regulators and post basic information about the companies they list. Crowdfunding companies themselves must provide basic disclosures to investors and regulators. The SEC is currently making rules, and crowdfunding websites are expected to go online by January of next year.