News
4:16 pm
Tue July 1, 2014

Indiana Companies Allowed to Use Crowdfunding to Raise Money

Secretary of State Connie Lawson on Tuesday.
Secretary of State Connie Lawson on Tuesday.
Credit Brandon Smith

Secretary of State Connie Lawson Tuesday announced rules are in place that open the doors for Internet crowdfunding in Indiana.

The rules were  developed after the legislature passed a bill authorizing the practice earlier this year.

Secretary of State Lawson says the online crowdfunding system is meant to help startup companies  and bolster existing ones. The rules allow Indiana private companies to raise up to $2 million in capital. Individuals can invest up to $5,000.

Lawson says companies must file each  investment offer with her office and the Internet sites that facilitate the deals must also register with  the Secretary of State."And we will spend every day trying to root out fraud but we won’t stand in the way of Hoosiers deciding  to invest in homegrown companies” she says.

Lawson says, unlike popular crowdfunding site Kickstarter, the Indiana system will allow individuals  to buy stakes in a company, rather than just donate money.

Still, she says investors need to do their  homework, “and just like any other security, there are risks when you invest and I’m calling on our private sector  leaders to help us police this new market for the bad actors.” 

Lawson says standard disclosure rules apply to companies using crowdfunding, meaning they cannot  withhold important information about their business from potential investors or promise something  they can’t deliver.