Below is an article by the San Francisco Chronicle entitled "Small California businesses may get OK for Equity Crowdfunding"
Small California Businesses may get OK for Equity Crowdfunding
By Carolyn Said, San Francisco Chronicle
March 31, 2015
American Grilled Cheese Kitchen is a San Francisco success story with 33 employees, two bustling restaurants, in the Mission District and South Park, and plans for a third in North Beach. Co-founder Nate Pollak has even bigger dreams: He’d like to open outlets throughout the Bay Area and nationally.
He needs money to do so. A decidedly non-tech enterprise like a restaurant won’t lure deep-pocketed venture capitalists seeking skyrocketing growth and a gargantuan payday. Bank loans aren’t big enough. Instead, he’d like to raise $1.5 million in two years from lots of mom-and-pop investors, offering them a slice of the business in exchange for small-scale investments — an approach called equity crowdfunding.
But laws limit his ability to ask for that kind of money.
“Here I am, 31 years old, full of energy, I operate two profitable business with really great numbers; we’ve proven ourselves in one of the toughest restaurant markets — and I can’t get a dime,” Pollak said.
That could soon change.
No major problems
The biggest concern for those states is making sure companies don’t accidentally advertise outside the state, which would violate SEC rules. Supporters note that the states allowing equity crowdfunding have not seen any major problems or scams crop up.
Crowdfunding advocates hope that all the state bills will get the SEC to act. “Every state that does this, it creates positive momentum and influence on what we all want, which is federal rules,” said Judd Hollas, CEO of crowdfunding site Equitynet.com, based in Arkansas.
Like other online equity-crowdfunding companies, Equitynet reaches out to accredited investors nationwide and so abides by the federal rules rather than trying to comply with a patchwork of different state regulations.
Pollak is waiting eagerly to see whether the Legislature creates a way for California companies like his to seek money from the crowd.
“I’ve grilled a lot of cheese,” Pollak said. “I’d love to be able to raise more capital to grow the business.”