President Alfond’s bill opens door for more Mainers to invest in local start-ups

AUGUSTA – A measure that would allow Maine businesses to sell securities as a means to raise start-up capital was unanimously approved by the Legislature’s Insurance and Financial Services committee today.

The measure, “An Act To Increase Funding for Start-ups,” is sponsored by Senate President Justin Alfond of Portland and seeks to remove existing barriers to “crowd funding” while maintaining Maine’s strong consumer and investor protection laws.
“Maine is a great place to start a business. And with this bill, we have a unique opportunity to support entrepreneurs, increase investing opportunities for more Maine people, and be a national leader in turning ideas into jobs,” said President Alfond. “By modernizing our securities laws, we can combine our entrepreneurial spirit with Maine’s ethos of helping our neighbors.”

Under the proposed measure, any Maine-based business interested in crowd investing can register with the Office of Securities. The measure allows business owners to set a target amount to raise, of no more than $1,000,000, and a hard deadline to raise it by. The business can then sell small amounts of equity to individual investors. If the business owners do not raise the target amount by the set deadline, all of the contributed money is returned to the investors.

The original measure proposed an individual investment cap of $2,000 per person. The committee voted to increase the personal cap to $5,000 per person.

Over the past several years, multiple websites have been developed to facilitate the “crowd funding” of businesses and projects. These sites, such as Kickstarter and IndieGoGo, have enabled entrepreneurs and artists to solicit small amounts of money from many individuals in exchange for gifts and prizes. Due to state and federal securities laws, businesses have been unable to sell small amounts of equity in their business as a way to generate capital.

President Alfond added, “This bill takes the innovative model developed by online crowd funding websites and brings it to the next level. By allowing and encouraging small-scale investment in companies, Mainers tell the world, if you have a vision and a plan, we want to support you with our Maine dollars.”

The bill, LD 1512, “An Act To Increase Funding for Start-ups,” will now be sent to the Senate for a vote.