Georgia remains one of a few states that can “crowdfund” with flexibility.
As anyone that has visited kickstarter.com knows, the ability to invest in start-ups and small businesses such as independent films is no longer limited to banks and wealthy individuals. As defined by Forbes, crowdfunding is “the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the internet.” In April of 2012, President Obama signed the Jumpstart Our Business Startup Act (JOBS) into law, which legalized equity crowdfunding through online investing. Under the Invest Georgia Exemption (IGE), companies specific to Georgia are permitted to sell securities to non-accredited investors within state lines.
How will the institution of IGE finally soften the burden that indie filmmakers so frequently face? With increased access to capital, Georgia-based entrepreneurs in the entertainment business are now able to finance their projects while simultaneously generating an audience all the way up to a film’s launch. The key ingredient to this Georgia intrastate crowdfunding is the removal of regulatory restrictions that were previously in place.
Knox Massey, the founder of Georgia Crowdfunding Community and Georgia Crowdfunding Investor Groups, believes that the implementation of IGE has opened doors to a segment of the investing public that had previously been excluded. Below, Massey explains the six reasons why the IGE has placed Georgia at the forefront of entrepreneurial growth:
- Intrastate crowdfunding is legal in Georgia.
- The IGE allows non-accredited investors who are Georgia residents the ability to invest in Georgia-based companies.
- Georgia residents who are non-accredited investors can invest up to $10,000.00 per company (issuer) under the IGE.
- Georgia issuers using the IGE can raise up to $1,000,000.00 annually.
- Georgia issuers using the IGE can advertise their respective capital raise(s).
- Georgia is only one of five states that currently allow this type of “intrastate” investment ability for non-accredited residents.
Of course, this newfound freedom in Georgia-based investments may well present new potential issues of liability. For example, securities sold under the JOBS Act must be sold via a platform registered with the SEC acting as a broker-dealer. IGE, however, does not require use of a funding portal (eliminating the need for a conclusive background check on a potential investor). Under Georgia law, the investor is no longer required to disclose their income or net worth as viable protection against exceeding the allowable intrastate investment.
Advocates of the law, however, argue that the benefits of the IGE outweigh the risks for small businesses (such as film startups in need of a boost). With the help of IGE, crowdfunding is both freely-available to interested Georgia investors and an invaluable source of funding for the local filmmaker. In addition, the very presence of the project online may organically generate momentum.
Despite speculation that it may take time for companies vying for investments to recognize the benefit of the IGE, Knox Massey remains confident that “Georgia is at the forefront of an exciting entrepreneurial experiment that could shape the future of crowdfunding for years to come.” The IGE has certainly created the opportunity for filmmakers in Georgia to fund promising films while harvesting an audience and an impressive following. Over time, the Invest Georgia Exemption will motivate the entertainment business in Georgia to continue pursuing what it does best: creating inspiring content even in the face of economic uncertainty.