Last April, Gov. Doug Ducey signed into law House Bill 2591. Known as the “Intrastate Offering Exemption”, as a job creation initiative designed to invigorate our state’s economy. This landmark piece of legislation allows Arizona small businesses the ability to sell stock directly to Arizona investors online.
This bill makes Equity Crowdfunding available to Arizona entrepreneurs and small business owners alike. Now, over a year later the first Equity Crowdfunding Portal has come to life. FundMyBusinessAZ.com, a broker-dealer registered with the Arizona Corporation Commission, “Arizona’s Crowdfunding Resource” was created to showcase Arizona entrepreneur’s projects and connect potential investors from around the state of Arizona. Fund My Business AZ Founder & CEO, Nick Andrews stated, “Our vision for this portal is to grow Arizona organically, connect local entrepreneurs with local investors and create jobs while keeping investments within our communities.”
What is Equity Crowdfunding?
Equity crowdfunding simply means that a “crowd” of investors can be solicited to invest small amounts of money into a business in exchange for an ownership stake. This is a major step in growing small businesses in our state. Former Arizona Small Business Association CEO, Rick Murray, who was instrumental in drafting the bill, making this portal possible states, “We are excited that small businesses have a crowdfunding platform to raise capital for their business in Arizona. This has been the consummate team effort from the business community and lawmakers and the result will be more jobs and more opportunity for Arizona small businesses.”
The FundMyBusinessAZ.com equity crowdfunding portal will allow Arizona entrepreneurs to solicit small investments from a large number of people at the same time. Each entrepreneur must complete their exclusive “Fund Ready” ten-step process, a process designed to meet the state’s crowdfunding provisions and maximize their probability of success. By making it possible to sell equity (shares of stock), this opens the door for many more investors to get involved and fund private businesses. As an example if 250 investors invest $2,000 each they can fund a $500,000 business.
Under the new Intrastate Offering Exemption, Arizona entrepreneurs can raise up to $1Million without a financial audit or up to $2.5Million with a completed financial audit from the prior fiscal year. Equity crowdfunding is an alternative to traditional fundraising. It is open to any legal industry including real estate, technology, film, medical and other early stage companies. Entrepreneurs can validate their business as they gain momentum during the capital raise as well as turn investors into loyal advocates. This is a great way to get their project’s message out there.
The new law allows any Arizona resident the opportunity to invest up to $10,000 in a 12 month period. Residents that meet the accredited investor requirements are not subject to the $10,000 limit. Investors can go to the online deal room, read information on the business proposal, and then have the opportunity to invest in the business. Investors are compensated for their investment by receiving shares in the company, with customary ownership advantages. This was previously unavailable to over ninety percent of Arizona residents who don’t meet the accredited investor requirements. Investing in start up businesses is risky so investors are encouraged to do their own due diligence.
The FundMyBusinessAZ.com portal offers education and consulting services relating to Arizona’s equity crowdfunding provisions, assistance in preparing and reviewing the necessary documents, and posting crowdfunding projects on their website. The website features include escrow and accounting services, e-signature capabilities, payment processing, bad actor checks and anti-money laundering oversight.
This portal is exclusive to Arizona residents and anyone with a modest amount to invest can find an appealing project. They can do their own research to make educated investment decisions. FundMyBusinessAZ.com will walk them through the process.
Finally, Arizona small businesses have new access to the capital that they need to get started and Arizona investors are now allowed to invest in these small businesses facilitating more small businesses coming into the market.
Nick Andrews stated, “I really appreciate Rick Murray’s encouragement, mentorship and advocacy” he also said “the first business offering has launched and can be seen at FundMyBusinessAZ.com.”
