Equity Crowdfunding Approved in West Virginia
West Virginia has joined more than 30 states in passing legislation to open up a new source of capital for entrepreneurs and small businesses. The West Virginia Small Business Capital Act (HB 2615), approved by the legislature and signed by Governor Tomblin during the recent session, allows West Virginia residents to purchase equity ownership in West Virginia companies via crowdfunding through an internet platform.
Made possible by the federal JOBS Act of 2012, the law will spur entrepreneurship, create jobs, track capital investment into each community and ultimately enable the state to meet the next generation of business leaders halfway.
“The Small Business Capital Act is a real solution for West Virginia business owners and I could not be more proud to have supported and pushed for this bill,” said Secretary of State, Natalie E. Tennant. “For months, I’ve been speaking with small business owners across the state about this law and there is so much excitement about the benefits of crowdfunding. This law allows us to do what we already do every day as West Virginians – help our neighbors by investing in them and showing them just how much we support our businesses and communities. I was happy to work with all parties involved to help take this great idea from proposed legislation to law.”
Joe Carlucci, New River Gorge Regional Development Authority small business coach, said the WV Small Business Capital Act creates another much-needed tool in the capital-access-tool-box for West Virginia small businesses.
“This form of funding is collaborative, cooperative, innovative, and gives fledgling and growth companies the necessary traction they need to bridge the financing gap from new idea to thriving sustainability. The unique key component of this bill is the “buy in” factor that is grown organically by community support, which only proves to strengthen customer validation, and traction when that company proceeds to traditionally financing expansion of an existing businesses or growing out of their startup. We are now on par with 30 other states setting the trend in support of their states small businesses. This is a great win for WV and demonstrates the out of the box approach we are taking towards economic development in the mountain state,” Carlucci said.
West Virginia angel investor Scott Rotruck said the law “emulates what has been done successfully in other states, and calls attention to what we need to do to make seed capital available for the launch and growth of new businesses in West Virginia.”
The West Virginia Small Business Capital Act includes built in fraud protections including bad actor disqualifications for both West Virginians and companies.
In addition to support by the Secretary of State’s Office, the bill is supported by the Auditor’s Office, West Virginia Chamber, INNOVA, TechConnect, the New River Gorge Regional Development Authority, the West Virginia HUB, the Charleston Area Alliance, the Charleston Regional Chamber of Commerce, Generation WV, Tamarack Artisan Foundation and the WV Brownfields Assistance Centers.
HB 2615 was sponsored by Del. Patrick Lane (R-Kanawha), Del. Larry Faircloth (R-Berkeley), Del. Carol Miller (R-Cabell), Del. Cindy Frich (R-Monongalia) and Del. Eric Nelson (R-Kanawha).