In 2013, Michigan enacted Public Act 264 and became one of four states to authorize pioneering intrastate crowdfunding legislation. Investment crowdfunding is a powerful economic development tool for using local capital to support and grow local businesses, fund start-ups, and nurture an entrepreneurial environment in Michigan.
How it Works
With the advent of Investment crowdfunding, new and existing Michigan businesses can raise capital from private, non-accredited Michigan investors. Businesses submit registration papers, a $100 application fee, and a business plan to the Department of Licensing and Regulatory Affairs (LARA) to get the process started. Existing businesses with audited financials can raise up to $2 million from non-accredited investors, and new businesses can raise up to $1 million from non-accredited investors. These crowdfunding investments can be used to leverage additional capital from traditional banks or financial institutions. Learn more on LARA’s Intrastate Equity Crowdfunding site.
Individuals interested in supporting their local businesses can invest anywhere from $100 to $10,000 per company, per year. Investment crowdfunding is structured to provide a return on investment, either through an ownership stake 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.
Our friends at Revalue have a great fact sheet on local investing and offer one-of-a-kind resources, services, and training workshops for Michigan residents interested in becoming local investors. Contact them directly for more information.
As investment crowdfunding becomes more popular across the country, more and more investment crowdfunding platforms are popping up. LARA’s site offers an up-to-date list of investment website operators.