Intrastate Crowdfunding

by Irene Tordera, It has been over two years since the JOBS Act was passed, but famous Title III, which would allow crowdinvesting, has not yet been approved. While the entire US crowdfunding scene waits for the SEC to release the final rules, some states decided, in the meantime, to enable crowdinvesting within their borders.


Intrastate crowdfunding is a wider phenomenon than one could expect: according to Wikipedia, currently “thirteen (13) states have intrastate crowdfunding exemptions in place and fourteen (14) states are in various stages of enacting/considering sponsored legislation regarding such intrastate crowdfunding”. The first state to adopt equity crowdfunding exemptions was Kansas, back in 2011. However, until April 2014 only 10 companies were reported to have used the crowdfunding exemptions in place in the state. Why such a small number? Intrastate crowdfunding exemptions have a quite big limitation: crowdinvesting is restricted to investors resident in the state that approved the regulations. This has another implication that makes it even more difficult for an entrepreneur to use intrastate equity crowdfunding: the SEC prohibited the use of social media to make intrastate crowdfunding offerings, because the reach of these channels can be beyond state borders. And, as it is widely known, crowdfunding and social media often go hand in hand.

Another question that one could ask is what will happen to intrastate crowdfunding when Title III is eventually  approved? According to some investors, federal equity crowdfunding will not substitute completely intrastate crowdfunding. In fact, intrastate equity crowdfunding potentially is a good finance source for small businesses that have a strong tie with a specific area, such as coffee shops or restaurants. These kinds of offerings are of interested most likely only to investors who live in the same area. However, what will be the destiny of intrastate crowdfunding after federal rules are approved by the SEC it is something we can only find out with time.

About the author – Irene Tordera

Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.

During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.

Tags: , , , , ,


How Crowdfunding Has Changed the Startup GameSingularity HubCrowdfunding has become a multi-billion-dollar industry, funneling millions of dollars into thousands of projects. Technology in particular is one of the leading categories on popular fundraising platforms like Kickstarter an [...]

The GuardianCrowdfunding: the new buzzword for academics needing research moneyThe GuardianArchaeologist Dr David Petts, from Durham University, has also used crowdfunding, raising almost £25,000 to fund a project on Lindisfarne, off the Northumberland coast. The dig, in June, led to [...]

Airbitz, BitPay, and Wefunder leverage bitcoin and new US ...Brave New CoinEquity crowdfunding platform, Wefunder, recently started accepting bitcoin. On the same day, popular bitcoin mobile wallet provider Airbitz announced the ...Wefunder Launches 10 New Regulation Crowdfunding Offe [...]

CNNMoneyDorothy's fading red slippers saved by $300000 in crowdfundingCNNMoneyThe ruby red slippers worn by Judy Garland in the beloved 1939 film "The Wizard of Oz" are set to undergo a major conservation effort following a successful crowdfunding campaign. The Smithson [...]

How The Fix Crowdfunding Act Continues To Help Improve The Success Rates Of Small BusinessesCBS LocalIn July of this year, Republican Patrick McHenry from North Carolina spearheaded two important bills. Both passed through the House in a landslide vote as part of The Fix Crowdfunding [...]

City turns to crowd funding to help replace boardwalk over Flint RiverMLive.comFLUSHING, MI -- The city of Flushing has opened a crowdfunding campaign to replace a wooden boardwalk over the Flint River. The goal is to raise $50,000 in 60 days on Patronicity, a crowdfunding website, to [...]

Kiplinger Personal FinanceRaise Money for Personal Bills on Crowdfunding SitesKiplinger Personal FinanceWhile crowdfunding is often associated with business start-ups, many people are finding it a fruitful way to raise money for personal needs. Sites such as YouCaring, GoGetFunding, G [...]

Cuba's self-proclaimed first indie game seeks crowdfundingVentureBeatJosuhe Pagliery is a multimedia artist and the founder of Empty Head Games, an independent development studio in Cuba. Now, the company is using Indigogo to try to fund Savior, which it is calling Cuba's fi [...]

BloombergCouples Desperate For Children Turn to Crowdfunding FertilityBloombergCrowdfunding has become a popular mechanism for many couples who can't afford the high costs of IVF, or adoption and surrogacy. “It's not an easy thing to share publicly,” says Crystal Barrett, 33 [...]

AZCentral.comTiny companies lure investors under Arizona crowdfunding lawAZCentral.comInvestors who make bets under the state's one-year-old crowdfunding law certainly have the potential to get in on the ground floor, but they must be patient and might not receive any returns. Th [...]

CFB Finance

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |