Alabama Securities Commission holds seminars on crowdfunding, answers questions from entrepreneurs

startups

HUNTSVILLE, Ala. (WHNT) —  Alabamians have a new way to raise money to start small businesses. It’s all thanks to legislation Governor Bentley signed in April.  The new law allows someone trying to start a small business in Alabama to use social media to find investors who live in the state.  The “crowdfunding” is limited to raising no more than one million dollars. It’s restricted to Alabama businesses and investors because of federal regulations.
This is a hot topic all across the country right now, but especially in Alabama because of the new law.

The Alabama Securities Commission is working to make sure residents know what they’re getting into. The organization held several seminars on the issue this week.

“It’s a new exemption from registration from securities. It can’t go out of state, it’s got to be strictly in state,” said Ed Reed with the ASC.

WHNT News 19 stopped by Alabama A&M’s Wellness Center Tuesday evening to check out the seminar. Reed said there has been good turnout at all of the meetings and people want to make sure they have all of their questions answered about the issue.

“Since 2008, financing has dried up, traditional financing is real tight,” said Reed. “So this gives another avenue of financing for that new idea for that new business that wants to get started.”

The law allows startups to use online advertising and social media marketing to lure in small investors. Those investors could be neighbors or friends. For the investors, it’s a chance to invest up to $5,000 in a business. “There’s risk,” said Reed. “But it’s a way that people can get involved in businesses in the community, people that wouldn’t normally have the opportunity will have that opportunity and businesses that might not have another avenue of financing will have an opportunity to raise money. “

Representative Laura Hall hosted the town hall meeting Tuesday evening. She said she’s excited that people are taking advantage and learning about the legislation. She’s really thrilled that it is a way to help Alabama business owners get the help they need from the community.

“What is more important is that it’s in Alabama. That being said, whatever the business is, it would be Alabama grown, it would be Alabama dollars, Alabama citizens who would be responsible for it, so that’s the most important part for me.”

You can contact ASC for inquiries regarding securities broker-dealers, agents, investment advisors, financial planners, the registration status of securities, debt management programs, to report suspected fraud, or to find out more about the crowdfunding exemption. 

Alabama Securities Commission
1-800-222-1253
asc@asc.alabama.gov
Alabama Securities Commission
P.O. Box 304700
Montgomery, AL 36130

1 Comment

  • Entrepreneur-in-Waiting

    We can make UNLIMITED political contributions.
    Why the $5000 cap? Most Angel investors find that to be pocket change. I have yet to see any of these restrictions on Kickstarter. Do we have special laws in this state that we blame the Feds for? [Citation Requested] please, I want the full story.

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