A proposed Colorado Crowdfunding Act will dramatically increase the number of i for intrastate private placements in that state. Normally, only accredited investors can invest in a private placement, meaning the must make at least $200,000 annually and have a $ million net worth. !he propos legislation allows any Colorado resident to invest up to $",000 in any Colorado #!he challenge right now with a Colorado company trying to raise money is if the get outside investors, wealthy investors or venture capitalists, they have to go a labyrinth of securities laws and lawyers,# ep. %an &abon, %'%enver, said. (!h overwhelming cost and burden is on that particular business.# Not only must the company and its investors to be based in Colorado, but at leas proceeds from the private offering must be spent in Colorado. Companies can rais million without audited financial statements and up to $2 million with audited f statements. +ull disclosure of all risks is re uired. -!aking money without full constitutes fraud. After funding, companies must provide uarterly reports to !he offering documents must highlight risk of loss and lack of li uidity to avoi with investors when and if things go wrong. /f passed and signed into law, intrastate e uity crowdfunding should start in th uarter of 20 in Colorado. Douglas Slain: 808-238-0398, [email protected].
A proposed Colorado Crowdfunding Act will dramatically increase the number of investors for intrastate private placements in that state.
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A proposed Colorado Crowdfunding Act will dramatically increase
the number of investors for intrastate private placements in that
state.Normally, only accredited investors can invest in a private
placement, meaning the investor must make at least $200,000
annually and have a $1 million net worth. The proposed legislation
allows any Colorado resident to invest up to $5,000 in any Colorado
company. "The challenge right now with a Colorado company trying to
raise money is if they want to get outside investors, wealthy
investors or venture capitalists, they have to go through such a
labyrinth of securities laws and lawyers," Rep. Dan Pabon,
D-Denver, said. The overwhelming cost and burden is on that
particular business."Not only must the company and its investors to
be based in Colorado, but at least 80% of the proceeds from the
private offering must be spent in Colorado. Companies can raise up
to $1 million without audited financial statements and up to $2
million with audited financial statements. Full disclosure of all
risks is required. (Taking money without full disclosure can
constitutes fraud.) After funding, companies must provide quarterly
reports to all investors.The offering documents must highlight risk
of loss and lack of liquidity to avoid problems with investors when
and if things go wrong. If passed and signed into law, intrastate
equity crowdfunding should start in the first quarter of 2016 in
Colorado. Douglas Slain: 808-238-0398,
[email protected].
