Tuesday, August 19, 2014

Intrastate Crowdfunding is Officially Dead in North Carolina - For Now

We are sad to report that the NC JOBS Act, which would have enabled intrastate investment crowdfunding of small businesses and startups in our state, is now officially dead. After the original crowdfunding bill (H680) passed the NC House last year by a vote of 103 to 1, the bill fell victim to political gamesmanship in the NC Senate. The Senate leadership tried repeatedly to attach other more controversial legislation to the NC JOBS Act, and each of those attempts failed either in the Senate or when sent back to the House. The final attempt today was a bill entitled H1224, which bundled together 6 other provisions for sales taxes and corporate welfare along with the JOBS Act, and was also tied to two other bills that would provide amendments to H1224 if it was passed. A very contentious debate about the other provisions in the bill raged over the last week between the Senate and the House, in committees, and in the caucuses, with the ultimate result a final vote today of 47-54 against the bundled bill. This was the final bill to be considered by the legislature for the current session, which will adjourn tomorrow.

The failure by the NC Senate to bring up H680 as passed by the NC House for a vote on its own merits represents a significant lost opportunity for North Carolina small businesses, startups, and everyday investors. Ever since 2008, it has been extremely difficult for small business to get funding from banks and other sources, and the NC JOBS Act would have enabled a significant new source of funding all around the state, all while not costing the taxpayers a dime. Many other states have already passed similar crowdfunding exemptions over the last year, and businesses in those states are beginning to benefit. North Carolina was an early leader in proposing this idea, and the merits of it are clearly understood by state governments around the nation. Unfortunately the North Carolina Senate seems to have little interest in helping the small business community.

The NC JOBS Act team would like to thank all of those who supported this effort along the way, including chief sponsor Representative Tom Murry, Speaker Tillis,  Lt Governor Forest, the many sponsors from the NC House, the Triangle startup community, small business around the state, and the over 15,000 visitors to this blog who were tracking this effort, emailing and calling the legislature with their support, and spreading the word about the opportunity. We appreciate everything you did to help out.

Perhaps after the election this year, the new version of the NC Senate will be a bit wiser next time around.



Wednesday, August 13, 2014

New Report Shows Crowdfunding Success Increases Follow Up Venture Funding

A new report from CB Insights, which covers the Venture Capital industry, shows that startups that have successful crowdfunding campaigns have a much better chance of attracting follow on venture funding. In a post about the report on WRALTechwire today, editor Rick Smith points out:

"Are North Carolina startups missing out on potential investments from venture capitalists because the state's general Assembly has yet to pass crowdfunding legislation?
A new report would indicate that's the case.
CB Insights, which tracks the venture capital industry, documents for the first time in a report out this week the importance of crowdfunding to startups not only for initial capital but also as a way to ignite interest from institutional investors. 
A copy of this report should be sent to every North Carolina Senator where the NC JOBS Act crowdfunding bill - passed overwhelmingly by the House - is caught up in a larger piece of legislation. (Our WRAL Capitol Bureau team says no action is expected anytime soon, by the way.)"

The post on WRALTechwire includes an excellent summary of the report. The full report can be read online.

We urge you to send the link to the WRALTechwire post and CB Insights Report to your NC Senator and the Senate leadership immediately, and ask the Senate to pass H680, the NC JOBS Act crowdfunding bill now!

Contact information for NC Legislators:

Representative Murry
 Tom.Murry@ncleg.net
 Office: 919-733-5602919-733-5602

Senator Berger
 Phil.Berger@ncleg.net
 Office: 919-733-5708919-733-5708

Senator Gunn
 Rick.Gunn@ncleg.net
 Office: 919-301-1446919-301-1446

Senator Meredith
 Wesley.Meredith@ncleg.net
 Office : 919-733-5776919-733-5776

Senator Rucho
 Bob.Rucho@ncleg.net
 Office: 919-733-5655919-733-5655

Senator Rabon
 Bill.Rabon@ncleg.net
 Office: 919-733-5963919-733-5963

Senator Apodaca
 Tom.Apodaca@ncleg.net
 Office: 919-733-5745919-733-5745


Saturday, August 2, 2014

NC JOBS Act Crowdfunding Update - House Rejects Senate Substitute Bill, Senate should vote on H680 on its own merits

Yesterday the NC House rejected the NC Senate's substitute consolidated bill H1224 which merged 5 separate and unrelated economic development bills into one. Part V of the bill is the original H680 NC JOBS Act crowdfunding bill which passed the NC House on its own by 103 to 1 last year. House members objected to provisions of several of the other bills that were included in H1224, but no objections were raised concerning Part V, the NC JOBS Act section. The NC Senate leadership has failed to bring the original H680 to a vote on its own merits, and instead has pursued a strategy of bundling the popular and innovative intrastate investment crowdfunding bill with other lesser known and more controversial bills in three different attempts to push them through the legislature. This strategy has failed. It is time for the Senate leadership to do the right thing and bring the original H680 up for a vote, and pass it before this session ends.

The Legislature has not yet formally adjourned, and the potential of reconvening again this session is still possible, so the future is uncertain. We call on the NC Senate to bring the original H680 NC JOBS Act bill up for a vote on its own. The North Carolina economy and job creation in our state will suffer if we fail to enable this new way of financing small businesses and startups across the state.

As of today, 12 states have already enabled intrastate investment crowdfunding, and 11 more states have started the process. Most have followed the lead of H680, which was the first intrastate crowdfunding legislation to be proposed and passed by any state house last year. This is now a nationwide trend, and North Carolina is in danger of missing the boat on this great opportunity.

Intrastate Crowdfunding Exemptions Enabled as of July 2014:
◦Alabama
◦Colorado
◦Georgia
◦Idaho
◦Indiana
◦Kansas
◦Maine
◦Maryland
◦Michigan
◦Tennessee
◦Washington
◦Wisconsin

Intrastate Crowdfunding Exemptions in Process as of July 2014:
◦Alaska
◦California
◦Connecticut
◦Florida
◦Illinois
◦ Missouri
◦North Carolina
◦New Jersey
◦South Carolina
◦Texas
◦Utah
◦Virginia

As we have emphasized from the beginning, the NC JOBS Act does not cost taxpayers a single dime. It is simply an exemption in our state securities law that enables a new way for small businesses and startups in our state to raise money with debt or equity, and allows any North Carolina citizen to invest in those opportunities provided the registration, reporting, limits, and disclosure rules in the bill are followed. Please see the FAQs for more details on the bill.

The fate of this bill is in the hands of the NC Senate leadership. This legislation enables a new type of financing known as intrastate investment crowdfunding. It has been endorsed by many of the top startup and business leaders in the Triangle community. The list includes endorsements from CEOs, founders, managing directors, partners, and investors at our leading startup accelerators, our leading venture capital funds, individual angel investors and angel funds, a leading CPA firm, the North Carolina Technology Association, the North Carolina Biotechnology Center, SAS Institute, UNC Chapel Hill Technology Development Center, Triangle area business attorneys, and many of our local technology startup CEOs. This is a strong showing of support that we received in a 72 hour period recently. These startup community leaders are representative of the over 14,000 startup and small business community members and everyday investors across our state that have visited our NC JOBS Act blog to learn more, and are excited about the possibilities to start and grow a new business, or expand an existing business, or invest in a favorite local business opportunity, and create more jobs.

We urge the Senate leadership to do the right thing, bring the original bill up for a vote, and pass H680.

Please call and email your expressions of support for H680 to the Senate Leadership. Senator Berger is Senate President Pro Tem, Senators Gunn and Meredith are the co-chairs of the Senate Commerce committee, and Senators Rucho and Rabon are the co-chairs of the Finance committee. Senator Apodaka is Chairman of the Rules Committee. Please ask them to move the original H680  bill as passed by the NC House forward. Representative Tom Murry is Chairman of the House Commerce Committee and the Chief Sponsor and creator of H680. The original bill needs quick action by the Senate before the end of the current session. Since H680 has already passed the Senate without changes or opposition as part of H1224, it will be very easy and quick to move it through the Senate and get this bill to the Governor's desk. We urge the Senate to get this done now!

Thank you for your support.

Best regards,
The NC JOBS Act Team

Contact information for NC Legislators:

Representative Murry
 Tom.Murry@ncleg.net
 Office: 919-733-5602

Senator Berger
 Phil.Berger@ncleg.net
 Office: 919-733-5708

Senator Gunn
 Rick.Gunn@ncleg.net
 Office: 919-301-1446

Senator Meredith
 Wesley.Meredith@ncleg.net
 Office : 919-733-5776

Senator Rucho
 Bob.Rucho@ncleg.net
 Office: 919-733-5655

Senator Rabon
 Bill.Rabon@ncleg.net
 Office: 919-733-5963

Senator Apodaca
 Tom.Apodaca@ncleg.net
 Office: 919-733-5745