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

AUGUSTA – A measure that would allow Maine businesses to sell equity as a means to raising start-up capital received broad support during a public hearing in front of the legislature’s Insurance and Financial Affairs committee today.

The measure, “An Act To Increase Funding for Start-ups,” is sponsored by Senate President Justin Alfond 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 of Portland “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 business owners 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 of up to $2,000 per investor. If the business owners do not raise the target amount by the set deadline, all of the contributed money is returned to the investors.

While resources exist to assist entrepreneurs with many aspects of business development including mentorship and educational programs, there is an area that remains problematic for Maine start-ups as well as existing small businesses: the ability to raise capital. This measure provides one way to get over that hurdle,” said Alfond

Over the past several years, multiple websites have been developed to facilitate the “crowd funding” of businesses and projects. Sites, such as Kickstarter and IndieGoGo, have enable 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 Insurance and Financial Services committee will hold a work session on LD 1512, “An Act To Increase Funding for Start-ups,” on January 23rd.