Colorado Proposes Crowdfunding Act

Flag-of-ColoradoColorado this week became the latest state to attempt to speed up the process for ordinary residents to invest in a private start-up company.

The proposed Colorado Crowdfunding Act would open up the potential pool of investors that start-ups can approach for funding.

By law, only accredited investors can buy stock in a private company today, and such investors must make at least $200,000 annually and have a $1 million net worth.

The bill allows any Colorado resident to invest up to $5,000 in a company without the need for accreditation.

“The challenge right now with a Colorado company trying to raise money is if they want to get outside investors, wealthy investors or venture capitalists, they have to go through such a labyrinth of securities laws and lawyers,” said bill sponsor Rep. Dan Pabon, D-Denver, during a press conference Wednesday. “The overwhelming cost and burden is on that particular business.”

Pabon’s bill would require the company and investor to be based in the state and that 80 percent of the proceeds of investment is spent here. House Bill 1246, introduced Tuesday, limits it to companies raising $1 million — or $2 million if they provide audited financial statements.

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Funding Launchpad Empowers Investment Crowdfunding History!

Earlier last month mobile scanner manufacturer Couragent Inc. announced they were launching an equity crowdfunding offering. Legally able to raise money from residents of Colorado, Illinois, New York, Wisconsin, and Wyoming, this makes Couragent the first American company to legally use investment crowdfunding. We are excited and thankful that Couragent chose to use Funding Launchpad’s crowdfunding technology to power their fundraising efforts.

We recognize that over the past few months, several platforms have claimed to be legally crowdfunding securities today. As far as we can tell, absolutely none are. Only Couragent’s offering, utilizing Funding Launchpad’s proprietary technology, meet three standards that are the hallmarks of investment crowdfunding:

  1. The ability to generally solicit (i.e. openly advertise that a company is raising money).
  2. The ability to sell securities to all investors, not just wealthy Americans and financial institutions.
  3. Utilization of a centralized internet platform to conduct the offering (that’s where our technology comes in!).

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