The JOBS Act: Non-Accredited Investment Crowdfunding In North Carolina This Summer?

William Carleton, Contributing Editor, VCExperts

Go to to get an update from Mark Easly and Steve Reaser on the progress being made in North Carolina toward accomplishing a state investment crowdfunding exemption for non-accredited investors. From what they report, it sounds like North Carolina might put such a law in place this month.

You know how I feel about the North Carolina bill. It puts the "crowd" back into investment crowdfunding (when the Senate gutted Congressperson Patrick McHenry's successful bipartisan bill in the process of putting together the JOBS Act, a chance for a meaningful experiment with investment crowdfunding at the federal level was lost).

Let's hope that in the process of committee markups and conference committees and the like, the North Carolina bill stays simple and true to the core experiment, which is to explore the question, might everyone, whether or not accredited, be permitted to participate in backing startups and small businesses?

Because most startups fail and because even the most sophisticated angel investors lose most of their money on most deals, there should be paternalism in the bill, and there is: investors who are not accredited can invest no more than $2,000 per issuer.

I'm glad North Carolina doesn't get into sliding scales or other tests or information gathering requirements that would not only overly complicate the essential investor protection of a cap, but would actually expose investors to risks of breaches of privacy.

I also like how Mark and Steve talk about how the exemption needs to be as relatively easy and frictionless as a Reg D offering that's limited to accredited investors. Throw in the paternalism of a cap, to mitigate an individual's loss, and the comparison to a Reg D deal is exactly the right analogy by which to measure the honesty of the experiment.

Photo: Kim Seng/Flickr.

William Carleton

Bill is a member of McNaul Ebel Nawrot & Helgren PLLC, a Seattle law firm. He blogs every day at