It is the process of soliciting funds from the general public, including individuals who do not meet “accredited” investor requirements, to create projects or fund new or existing businesses.

On December 30, 2013, Michigan became one of only four states (and the most innovative) in the country to pass intrastate investment crowdfunding legislation. Known as the Michigan Invests Locally Exemption (MILE) law, it is structured to provide a return on investment, either through an ownership stake (equity crowdfunding) or through a debt position. Investors with a debt position are provided a pre-determined rate of return that can be structured in a variety of ways within the investment offering. For example, a local investor invests $5,000 in a new brewery on Main Street and, with other investors, receives a proportional amount – based on investment percentage – from 5% of the brewery’s revenue each month until the investor is repaid $7,500.

Rewards based crowdfunding – like Kickstarter or Indigogo– provides a ‘token’ of appreciation in exchange for donations. For example, a non-profit might raise money to put a new roof on a facility, and in exchange for your donation you could receive a special t-shirt in thanks. In an investment crowdfunding campaign, investors may receive a financial return on their investment; much like traditional investment models.

No. Under the Securities Act of 1933, most entrepreneurial investment activity has revolved around venture capitalists, angel investors, and “accredited” investors, the wealthiest 3% of the country. Now, investment crowdfunding allows new and existing Michigan businesses to raise capital from private, “non-accredited” Michigan investors, who comprise 97% of the population. Non-accredited investors can invest up to $10,000 per company, per year, in businesses incorporated or organized under Michigan law. Accredited investors may invest any amount.

The Federal Securities and Exchange Commission separates U.S. Investors into two groups – Accredited investors and Non-Accredited investors. Accredited investors have a net worth, not including their homes, of $1 million dollars or more, and an income of $200,000 or more if single and $300,000 or more if married. Approximately 3% of the population are accredited investors.

Non-accredited investors have a net worth of less than $1 million dollars not including their homes, and an income of under $200,000 if single and $300,000 if married. Approximately 97% of the population are non-accredited investors.

Under MILE, The funding of projects ranges from business start-ups and expansions to real estate purchases. Essentially, any for-profit entity or project is eligible.

Yes. However, the rules around MILE would not apply. Non-profits and local units may engage the general population to raise money for anything from projects to ongoing expenses, however, because of the growing visibility and use of crowdfunding, more opportunities to raise money from “the crowd” are anticipated.

The League represents cities and villages statewide and strongly believes that better communities will lead to a better Michigan. The research is clear that in order to have a prosperous economy with high per capita income, we must have thriving places that attract talent. One of these essential assets is fostering entrepreneurial opportunities. Having a framework in place that attracts talented entrepreneurs and gives them an opportunity to grow new ideas and businesses is a key place-based strategy. The League will help facilitate this powerful new tool so that communities, businesses, and local investors can all benefit and help grow a stronger Michigan.

The League has launched a website, which will provide extensive background information, how to get started, as well as highlight successful funding projects and serve as a clearing house for Michigan Investment crowdfunding projects as they develop. The website will also act as a portal to Fundrise and Localstake, two existing leading crowdfunding platforms. Although they both serve as web portals for crowdfunding investment, Fundrise, lets you invest directly in local real estate. It will connect investors directly to individual properties online. Localstake helps connect businesses looking for capital with local investors.

Essentially, a business or start-up determines they want to raise funds from local/state investors. They must have a business plan and other documentation to support the investments sought, register with the State of Michigan, arrange for an escrow account where the funds are held, set a minimum and maximum raise amount, set a time period during which they will work to raise funds, and then take the investment offer to the potential investors. Once they have raised their target amount they are free to use the money as they describe in the offering.

Local investing is one of the best ways for communities to control their own destiny. Traditionally, local communities have been at the mercy of large investors and businesses who make their own decisions about where to invest and why. If local investors can be mobilized to invest in local businesses, they can literally support the businesses most likely to positively impact their own economies. Small businesses are the real engines of our economy, and local small businesses employ our neighbors, add to the tax base, participate as citizens, and bring real value to our communities.

The League is developing materials that community leaders can pass out to help spread awareness of the issues. Refer them to our website. We will continually be updating the League’s crowdfunding website and profiling case studies of successful crowdfunding projects as they are completed.

Local businesses doing MILE campaigns will be reaching out to their communities so keep in touch with local media and business organizations. The MML investment crowdfunding website,, will also be posting Michigan investment crowdfunding information and will be updating that information on an ongoing basis.

Any for-profit business is a potential candidate. MILE is not restricted to just high-tech or just local restaurants. Industrial, commercial, retail, and real estate investments are all eligible to use investment crowdfunding under Michigan’s MILE.

No, MILE can be used for new or existing businesses; there is no restriction in the law.

While a MILE campaign is in process, all investor funds are held in escrow; if the target minimum is not reached in the designated time period, all funds are returned to the investors.

No, MILE does not require use of a website. However, for many projects, use of a website helps in getting the word out and helps in the management of the investments. Some websites also provide an analysis of the businesses plan and advice to the business/entrepreneur.

Local investments carry the same risks as any investments. Under MILE, investors must sign a document that states the investor is prepared to lose all of their investment. However, when investing locally investors have the opportunity to gain first-hand information about the business, and in a real sense are able to follow one of the basic rules of investment – invest in what you know. Further, local investing brings benefits that extend beyond a purely financial investment.   It allows investors to support their communities in a tangible and real way that impacts the financial well-being of the community.

Currently, there are 7 states which have investment crowdfunding mechanisms in place: Iowa, Georgia, Wisconsin, Michigan, Maine, Washington and Indiana. It appears that intrastate investment crowdfunding is also being considered in about 14 other states.

This legislation would create the legal framework under which Michigan stock exchanges would register and operate. Once an exchange’s structure and rules are approved and registered, it would be able to function as a central marketplace for Michigan businesses and residents – a place where investors and entrepreneurs a like could connect to buy, sell, trade, and resell in-state.