Governor Scott Walker signed the Wisconsin intrastate crowdfunding bill into law last fall, making Wisconsin just the third state with such an exemption and the first to create one legislatively. The exemption will go into effect on June 1, 2014. Once it goes into effect, Wisconsin based businesses will be able to raise up to $1M (no audit) or $2M (audit) in equity online from Wisconsin residents. All Wisconsin residents (regardless of net worth) will have the opportunity for the first time to invest up to $10,000 and receive ownership stakes (as opposed to sample product or rewards) in local companies they care about. The Wisconsin bill eliminates much of the red tape companies will likely face under the proposed federal JOBS Act Title III. To take advantage of the new exemption, a Wisconsin company would need to comply with certain provisions, including:
1. File notice with Department of Financial Institutions;
2 Conduct the offering through a website registered with DFI;
3. Provide disclosure statement to investors that discloses information about the company including its business plan, its officers and directors, the terms of the offering and ownership structure, and risks;
4. Enter into escrow agreement with state bank;
5. Upon successful raise, provide investors with quarterly update, which can be delivered via a website.
Having been involved from the beginning and a leading advocate for this bill, we are extremely excited to serve as the website portal connecting Wisconsin food and beverage companies with passionate local investors. Our excitement is two-fold:
1. Job Creation and Economic Growth
Food and beverage is a key driver of the Wisconsin economy. As the top five food manufacturer overall, Wisconsin is one of the top producers of cheese, dairy, potatoes, sweet corn, and organic products. Wisconsin agriculture is a $50B industry. Wisconsin is 8th in the country in breweries per capita. The Wisconsin Restaurant Association estimates that the food and beverage category accounts for $7.3B in sales. On the retail side, Wisconsin's restaurants are the top private sector employer in the state, employing over 250,000 people, Therefore, it would serve Wisconsin well to support an initiative that gets some of its biggest job creators and revenue makers additional capital to grow and expand.
Communities are often built around local restaurants, pubs, bakeries, and breweries. Equity crowdfunding will allow Wisconsin residents to take charge of and shape their local communities through funding local establishments. Imagine someone walking past a vacant store front in the community and wishing an entrepreneur would open a bakery. At the same time, an aspiring baker has the same dream and a solid business plan to turn the vision into a reality. Under the current rules and regulations, these two individuals might never discover each other. Equity crowdfunding, on the other hand, will finally provide a mechanism for residents to invest local. If there's enough support, the community funds the bakery's opening. The bakery is a success and creates more foot traffic in the area, which in turn draws more businesses and jobs to the surrounding neighborhood. What was once a run down area has now been transformed into a vibrant district. And all of this was made possible through equity crowdfunding.