MADISON, Wis. - State lawmakers are recognizing crowdfunding as an effective strategy to get people to invest in new startups.
State Sen. David Craig, R-Town of Vernon, called his crowdfunding bill a win-win for a small business that is looking to expand.
"If you're a baker and you need a new oven, you need to bump out your property and put a new kitchen in," Craig said. "This will allow you to go to that net cast of individuals who've expressed an interest to you through this public relations campaign that you do to get investment into your business."
In hopes of expanding her business, Cheryl Glover, the owner of Cat Cafe Mad, created a crowdfunding campaign in May. The campaign raised more than $10,000 of the $40,000 she needed for the expansion.
"I dedicated myself to that Kickstarter campaign," she said, adding that she devoted several hours each day to getting people to donate.
She said she created the campaign after she realized she had two options: "Go out of business or go big." Glover chose to go big and add a cafe portion onto the pre-existing cattery.
Cat Cafe Mad is just one of the Madison-area businesses that has used crowdfunding.
The proposed legislation at the Capitol makes changes to conform to potential U.S. Security and Exchange Commission rules. The SEC regulates crowdfunding at a national level.
"It's a new avenue of investment that's not conventional," Craig said. "We've always had this dynamic where, if you're a small businessperson, the only game in town was your bank, and in certain situations, that isn't a product that'll work in all situations for a small business."
Craig said the measure keeps in place current anti-fraud laws related to crowdfunding.
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