Legislation sponsored by Assembly Republicans Parker Space and Alison Littell McHose that promotes economic growth and job creation today was approved by the Assembly Financial Institutions and Insurance Committee.
The bill, A-2073, will permit small private New Jersey businesses to raise money through “crowdfunding” web portals.
“Investment capital is crucial for any start-up or growing business, and in today’s environment, conventional sources of money are few and far between. Introducing intra-state crowdfunding to New Jersey will provide companies with cost-effective access to the funds needed to expand and create more jobs,” said Assemblyman Space, R-Sussex, Warren and Morris.
The legislation provides exemptions from registration with the Bureau of Securities for companies organized in New Jersey that offer intrastate crowdfunding investment opportunities. The total investment can not exceed $1 million, and the investment from any single purchaser is capped at $5,000.
“Innovative businesses can use this new source of funding to open new ventures, expand existing operations, develop, manufacture and market new products here in New Jersey, and to gain an important competitive advantage over out-of-state rivals,” said Assemblywoman McHose, R-Sussex, Warren and Morris. “Opening the spigot of this funding option benefits business, the state’s workers, and the economic climate.”
Web sites like Kickstarter and Peerbackers introduced crowdfunding to the market, but those donation-based sites are inadequate for raising funds for an ambitious business project. State-sponsored equity crowdfunding initiatives have proven successful in a handful of states, including Georgia and Kansas.
“Our legislation helps local investors connect with in-state businesses. They can visit the facilities, meet key personnel, and take pride in their investment,” said Space, the owner and operator of Space Farms Museum and Zoo.
This legislation is a version of the federal Jumpstart Our Business Startups Act, commonly referred to as the JOBS Act, which was championed by Congressman Scott Garrett (R-5). It passed Congress with bipartisan support and was signed into law in 2012. Parts of this law are still waiting to be implemented which led to the introduction of New Jersey’s version to jumpstart businesses here.
The measure has bipartisan sponsorship, and Space and McHose are joined as sponsors by Assembly Republican Amy Handlin.