Proposal floated to allow crowdfunding to sell stock shares to Wisconsin small businesses

MADISON, Wis. — Wisconsin small businesses could sell stock shares to potential investors online under a proposal unveiled Tuesday that its backers said would take the popular Kickstarter model to a new level.

Crowdfunding Internet sites such as Kickstarter and Indiegogo allow the public to donate money to help finance projects, often in exchange for a gift or sample product like T-shirts and bumper stickers.

But the bill circulated for co-sponsors on Tuesday would allow interested investors to purchase stock and equity in a business, not just make a donation, using the same online crowdfunding methods.

Under that model, backers of a business would become investors who stand to make money if a company succeeds, not just donors with no stake in the outcome of the venture.

The proposal sponsored by three Republican lawmakers could be taken up by the GOP-controlled Legislature as soon as next month.

Wisconsin would be a pioneer in the area of offering stock sales through crowdfunding, as only two other states have passed similar laws, said David Dupee, founder of CraftFund, a Milwaukee-based crowdfunding platform for craft brewers nationwide.

Dupee joined with the bill's primary sponsors — Sen. Leah Vukmir, R-Wauwatosa, Rep. David Craig, R-Town of Vernon, and Rep. Chad Weininger, R-Green Bay, — at a Capitol news conference on Tuesday.

Kansas and Georgia have passed similar laws, and the idea has been introduced in North Carolina and Washington, Dupee said.

There were no estimates on how many Wisconsin businesses may take advantage of the crowdfunding opportunity to sell equity. The bill would exempt companies from Wisconsin securities law requirements that typically cost about $30,000 in legal and other fees to meet, Craig said.

Investors, as well as the businesses, would have to be in Wisconsin. Businesses could raise up to $1 million without an audit, or up to $2 million if they are audited. No more than $5,000 in stock could be purchased by any one investor who is not accredited and shares could not be resold in the secondary market.

The crowdfunding idea is an important avenue to help those seeking investors, said Scott Bushkie, president of CornerStone Business Services, Inc., in Green Bay. His company is a mergers and acquisitions firm that focuses on selling other businesses.