Proposed Bill Would Expand Equity Crowdfunding in Illinois

John Gregory -- Illinois Radio Network

You may have heard of crowdfunding projects through sites like Kickstarter, but a new bill would bring a different kind of investing platform to Illinois.

It's called intrastate equity crowdfunding, allowing Illinois residents to buy up to $5,000 per year in stock in Illinois-based companies through crowdfunding sites. It may sound like traditional investing, but Anthony Zeoli, an attorney with the Chicago law firm Ginsberg & Jacobs who drafted the original bill, says those investment opportunities now are limited to either close relatives or the wealthy.

"So yes, you can go to your friends and family and say 'Want to invest $5,000?' but here this allows you to say to the internet of Illinois residents 'This is the idea I have, do you want to invest $5,000?'" Zeoli said. "So from the company's standpoint, it opens an entire array of new investors."

Those investors would have to be non-accredited people with a net worth of less than $1 million and less than $200,000 in annual income.

While equity crowdfunding has been approved at the federal level, implementation has been stalled because the Securities and Exchange Commission hasn't finalized the rules. Fifteen states, including Indiana, Michigan, and Wisconsin, have passed state laws allowing equity crowdfunding between in-state companies and residents.