On June 13, the Ohio Chamber testified before the House Financial Institutions, Housing and Urban Development Committee in support of HB 10, the Crowdfunding bill. The bill would allow for intrastate crowdfunding as a way to raise capital for start-up or small businesses. This bill was reviewed and supported by our Ohio Small Business Council.
We recognize that crowdfunding is an increasingly emerging and valuable tool for entrepreneurs to gain access to capital. In the age where most financial transactions are taking place online, it seems inherent that businesses should also have access to using the internet for raising money. Raising capital through crowdfunding fills a void in which “traditional lending cannot always fill.”
Many people in Ohio and throughout the U.S. are already taking part in crowdfunding by making “donations” to particular causes through platforms like Kickstarter and Go Fund Me. This legislation would allow Ohioans to directly invest in an Ohio business through an online portal known as the OhioInvests Portal. The portal would provide the intermediaries with a means to offer and sell securities to investors.
Like any investment, there are still risks involved. HB 10 does include provisions that spell out eligibility requirements of those conducting the intrastate crowdfunding. The bill also would require that a disclosure of the risks associated with the investment be made that makes it clear no state or federal securities commission has reviewed or approved the offering.
Thirty states have already adopted similar legislation. Ohio’s legislation would cap how much can be raised in a 12-month period to $5 million. This cap would put Ohio at the high end of the spectrum but the Ohio Chamber feels it is appropriate as it could expand funding access beyond start-ups to small and mid-sized firms looking for new ways to obtain capital.