Nearly two years after Washington D.C. passed the JOBS Act, which legalized crowdfunding of startup fund raising, the law goes unused, awaiting a final set of regulations from the SEC.
With no end to that process in sight, we here in Washington state say it is time to make crowdfunding a reality. Luckily, securities are regulated by the states, and as such it is possible for the Washington Legislature to pass a law which makes crowdfunding legal within Washington state.
Such a law is halfway through the process of being passed. HB 2023, also known as The Washington Jobs Act, passed the House by a vote of 89-9 earlier this month, and is scheduled for a hearing in the Senate on Tuesday.
This law will allow any Washington State company to raise up to $1 million per year from Washington residents. Any resident will be able to invest at least $2,000, with that amount rising to 5 percent or 10 percent of a resident’s income or net worth.
No longer will entrepreneurs be limited to raising money from “accredited” investors!
Since the Federal Securities Act of 1933, the Securities Exchange Act in 1934, and the Investment Act of 1940, selling shares of a startup to investors has been heavily controlled and limited. With the current definition of accredited investors, only 3 percent of Americans are allowed to invest in startups.
For the half million startups per year, this means that very few ever find funding beyond the savings accounts and credit cards of the founders. Plus as the accredited investors tend to organize around entrepreneurial hubs like San Francisco, New York, Seattle, Boston, Austin, and Boulder (not coincidentally all Xconomy cities), the entrepreneurs elsewhere find it nearly impossible to raise money from investors.
The same is true on a smaller scale, with Seattle home to nearly all the funded startups, leaving all of Eastern Washington, the Olympic Peninsula, Bellingham, Olympia, and Vancouver with next to nothing.
This will change, but only if this bill passes. The sponsors of this bill, Habib, Ryu, Zeiger, Maxwell are all from the House, and thus your help is needed as the Senate takes up the bill.
Write your Senator. Write to your State Senator (you can find him or her here). Your message can be as simple as:
I support HB 2023, the Washington Jobs Act. Please help ensure it comes to vote and passes the Senate during this session.
Fill the Room. The bill will be discussed within the Senate’s Financial Institutions, Housing & Insurance Committee on Tuesday at 1:30 p.m. in Room 2 of the J.A. Cherberg Building in Olympia.
Show your support by coming to the hearing, and signing in as an advocate for the bill. Filling up the hearing room with supporters will show how much crowdfunding is wanted, and will send a clear message to the Senators that they should get behind this bill.
The way the system works in Olympia, either this bill passes the Senate in March, before the end of this session, or we wait a year until the legislature is back in session, and we hope that Habib, Ryu, et al are interested in trying to get the bill passed again, from scratch, starting once again in the House.
This is a huge opportunity to not just get this bill turned into a law here in Washington, but to also send a message to that other Washington that “We the People” want the opportunity to invest in startups.
Editor’s note: This piece is adapted from a post on Libes’ blog on Friday.
