With the goal of making it easier for Kentuckians to invest in new or growing businesses across the state, State Representative Steve Riggs said, on Monday, Aug. 25, that he will file legislation that would bring crowdfunding to the commonwealth.
“This form of investment, which enables entrepreneurs to tap into a pool of hundreds if not thousands of investors, has really taken off in the last couple of years,” said Riggs, of Louisville. “Kickstarter is the most widely known effort, but we’re starting to see states localize this approach as well, which is making it easier for home-grown businesses to raise the money they need to get off the ground. I think it’s time for Kentucky to take part.”
Riggs noted that similar legislation just took effect in Indiana last month. That law allows individuals to invest up to $5,000 at a time while helping entrepreneurs raise up to $2 million through this program for their business. There are built-in safeguards that, Riggs said, his bill would have as well to protect investors from fraud or if a business plan falls through.
According to the National Conference of State Legislatures, 16 states have legalized equity crowdfunding since 2011, and legislatures in a more than a half-dozen others have considered similar bills. These states are taking advantage of a change in federal law that enables them to make this opportunity available as long as the investment stays within the state’s boundaries.
“This could be a boon for such community-oriented businesses as breweries or restaurants or any other company involved in high-tech fields, such as the start-ups that are based on research at our local universities,” Riggs said.
Riggs noted that there have been several studies lately showing that more Kentuckians are starting their own business. Earlier on Monday, Governor Steve Beshear announced that the State Entrepreneurship Index ranked Kentucky fourth among the states, while the Kauffman Foundation Index recently said Kentucky was the fifth-best state for entrepreneurial activity over the last two years. In January, meanwhile, the U.S. Bureau of Labor Statistics said Kentucky led the nation in new-business creation during the last three months of 2013.
“These studies are further proof that our citizens already have the drive and know-how necessary to start their own business,” said Riggs. “I’m proud we’ve taken several steps to help that along, such as expanding the angel-investor tax credit this year and creating a state office dedicated to entrepreneurialism, but there is always room to do more. My bill is the next logical step.”
Riggs said he will pre-file the legislation this week, and it will be discussed during the interim and when the General Assembly convenes the 2015 Regular Session in January.
If you would like to talk with Riggs, you can reach him at 502-640-1478.