ATLANTA – The nation’s first business with federal approval to use multi-state crowdfunding is a Georgia company building on an innovative state law.
Atlanta-based Groundfloor snagged the prize. It was begun in North Carolina but moved to Georgia to take advantage of the Peach State’s law that opens the door to small investors.
A state law passed in 2011 allows individuals to invest up to $10,000 in companies, much the way crowdfunding has been used to raise cash for charities and rock bands. Without the law, the companies would be limited to investments from millionaires or the expense of a public stock offering.
Groundfloor raises money for real-estate developers. It has raised more than $2 million for various projects so far, with no defaults and more than $800,000 already returned to investors, according to the company website.
Georgia was the second state in the country in 2011 to pass legislation allowing crowdfunding for companies. Secretary of State Brian Kemp oversees the program called Invest Georgia Exemption.
He imposed a $1 million annual ceiling on what could be raised, but he announced Thursday he is raising that to $5 million.
“We had some good feedback from companies that the $1 million cap was really limiting the type of projects that could use the exemption, so we are looking into raising the limit to allow even more investment into Georgia companies,” he said.
The federal decision also announced this week grants Groundfloor the opportunity to raise funds in seven additional states, the first multi-state authority granted by the U.S. Securities and Exchange Commission under the U.S. JOBS Act, or the Jumpstart Our Business Startups of 2012.