The Senate in the State of Maine has given its preliminary approval to a bill that enables residents of Maine, even those with modest income, to invest in local startups and small businesses, PressHerald.com reported. Called "An Act to Increase Funding for Startups," LD 1512 will now be forwarded to the House for initial approval. If approved there it would be sent back to the Senate to be enacted.
The proposal would give the opportunity to small businesses in Maine to secure as much as $2 million in funds by advertising and selling shares in their company to the state's residents, including those who are not considered "accredited investors" based on federal standards. These businesses would be able to get investors by crowdfunding in websites like Wefunder.com where registered users only need as little as $100 to be able to invest in their preferred startup, the report said.
The proposed measure, however, prevents companies from offering shares worth over $5,000 annually to only one investor. It also only covers investment activity done in companies and investors in Maine, the report said.
The bill was sponsored by Senate President Justin Alfond, a Democrat from Portland. He said the purpose of the bill was to help Maine's small businesses raise capital more easily while giving the residents the opportunity to support companies that have high growth potential, the report said.
The report quoted Alfond as saying, "With this bill, we have a unique opportunity to support entrepreneurs, increase investing opportunities for more Maine people, and be a national leader in turning ideas into jobs. This bill is a win-win."
Before the approval of the federal Jumpstart Our Business Startups Act or JOBS Act in April 2012, pitching and selling shares in a private firm to investors who were not accredited violated federal law, the report said.
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