Crowdsourcing.org by Anton Root | October 2, 2013

New Jersey is the latest state to consider implementing equity crowdfunding.

On Monday, state senators Joe Kyrillos and Ray Lesniak introduced a bill that would legalize equity crowdfunding at the state level.

“At a time when conventional sources of financing are scarce, this legislation will help New Jersey’s innovators seek private capital from the investing public to develop their products or services right here in our state,” Kyrillos said in a press release announcing the initiative. “It will clear the way for responsible, private investment to jump start small businesses and increase job opportunities.”

If passed, the bill will allow Garden State-based entrepreneurs to raise up to $1 million from unaccredited investors living in New Jersey. The legislation caps the amount each individuals can invest at $5,000.

Kyrillos and Lesniak’s legislation is similar to what has been proposed in other states, including Wisconsin and North Carolina. Other states to consider equity crowdfunding include Washington, Georgia, and Kansas.

Related: Equity Crowdfunding Is Now Legal. How Can You Get Your Piece of the Action?

Kyrillos, a Republican from the state’s 13th district, announced that he would introduce the bill last week, and quickly found a Democrat to co-sponsor the initiative. Kyrillos and Lesniak recently worked together as co-sponsors of the “Economic Opportunity Act of 2013,” which Governor Chris Christie signed into law several weeks ago.

States are taking the initiative on equity crowdfunding as the SEC has yet to release the proposed rules around the new way of raising capital at a federal level. While intrastate equity crowdfunding may be less prone to fraud, as it’s more likely that investors would be able to travel to visit a company that they’re considering funding, not all New Jerseyans are in support of the idea. The Star-Ledger’s editorial board, for instance, urged caution around crowdfunding this morning. Other local newspapers like the South Jersey Times, though, were more bullish on the idea.

Source: Crowdsourcing.org