I spent some time recently reading the crowdfunding exemptions, plural, in Wisconsin Act 52, enacted less than a month ago.
Yep, that's right, there is more than one crowdfunding exemption in the Wisconsin act. I didn't pick up on that until now!
One of the Wisconsin exemptions is for conducting a crowfunding campaign the old fashioned way, via the internet; the other is for conducting a crowdfunding campaign privately, offline and without use of general solicitation and general advertising.
The biggest differences I see between the two is that the private crowdfunding exemption doesn't entail delivery of a detailed business plan, doesn't have a pre-offering or pre-sale notice filing requirement (a notice must be filed, instead, "before the 101st offer of the security"), and may permit commissions on the selling of securities as long as the purchasers are "certified investors."
"Certified investor" is a new creation of Wisconsin. It denotes:
"an individual who is a resident of this state and who, at the time of an offer or sale of securities, satisfies any of the following:
"(a) Has an individual net worth, or joint net worth with the individual's spouse, of at least $750,000. For purposes of calculating net worth under this paragraph, the individual's primary residence shall be included as an asset and indebtedness secured by the primary residence shall be included as a liability.
"(b) Had an individual income in excess of $100,000 in each of the two most recent years or joint income with the individual's spouse in excess of $150,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year."
Note that not only are the net worth and income thresholds lower in this standard, but there is a pointed rejection of the Dodd-Frank mandated exclusion of the equity in the principal residence under the net worth test.
Anyway, the point of qualifying as a "certified investor" is that you are then not subject to the $10,000 limit on investing which would otherwise apply (under both exemptions).
Much more to be said about the merits of the Wisconsin crowdfunding exemptions. It may be most useful to express these in the form of a chart that compares features with Title III crowdfunding under the JOBS Act.
So, more to come.
Photo: cryptic_star / Flickr.