Dave Olive, of Granger, picks out produce Wednesday at Purple Porch Co-op in South Bend. The co-op used Kickstarter, a donation-based model of crowdfunding, to help raise capital for its brick and mortar store, which opened earlier this year. A new law went into effect Tuesday in Indiana that will allow businesses to utilize Internet-based equity crowdfunding. (SBT Photo/ROBERT FRANKLIN)
On the web
To view Indiana's crowdfunding rules, visit www.in.gov/sos/InvestInIndiana. Investors and entrepreneurs with questions about crowdfunding may also call the Securities Division at 317-232-6681.
SOUTH BEND -- Equity crowdfunding is now legal in Indiana.
Previously, the only type of crowdfunding allowed was donation-based crowdfunding, where investors had no expectation of return or ownership.
But new state rules now allow Indiana entrepreneurs to raise up to $2 million and Indiana investors to invest up to $5,000 per opportunity, through online fundraising campaigns.
"It means that Indiana companies have the opportunity to raise capital from a different source than in the past," said Indiana Secretary of State Connie Lawson, in a phone interview. "It's a way for businesses to harness the power of the Internet and reach investors they couldn't reach before."
Up until Tuesday, private Hoosier companies could offer securities, or shares, only to accredited investors -- those with a net worth of at least $1 million, excluding the value of their homes, or an annual income of more than $200,000.
"Now all Hoosiers, not just wealthy ones, will have a chance to invest in Indiana," Lawson said.
It has taken more than two years to reach this point. In April 2012, Congress passed the Jobs Act authorizing the Securities and Exchange Commission to write federal rules for crowdfunding. Those rules still have not been finalized.
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