Companies looking to raise capital have more options than ever before—the new Indiana crowdfunding law, a couple of new federal investment crowdfunding laws, traditional securities laws and traditional donation-based crowdfunding.
Regulations that went into effect July 1, 2014, allow Indiana businesses to solicit capital from rank-and-file Hoosiers in increments of $5,000 or less per investor. The main stipulation: Both the business and the investor(s) must be Indiana-based.
The seven-employee Indianapolis firm launched in June 2013, raising funds for two companies in its first six months. Over the following eight months, it brokered funding for eight companies and has eight in queue.
The online investing marketplace Localstake brokered a little more than $1 million in private investments for an Indiana distillery and a solar-heating startup in 2013, through crowd-funding. Instead of receiving a T-shirt or other novelty for their money, as with typical crowd funding, contributors received an actual stake in the business.
The founders of Indianapolis-based LocalStake aren’t in any rush for the SEC to write the rules governing crowdfunding. It can match private companies with small investors now.
Private firms that need to raise relatively modest amounts of capital have a hard time finding money. Now three Indianapolis entrepreneurs think they have the answer: crowdfunding. Individuals make small investments that are aggregated to fund a business. Indianapolis-based Localstake wants to be the matchmaker.
