If you haven’t heard, the North Carolina Senate voted down a series of measures that included intrastate crowdfunding, putting to rest a two-year battle to change laws to allow unaccredited investors in the state to fund North Carolina businesses.
Today’s news – along with an announcement that fast-growing, national headline-grabbing real estate crowd lending startup GROUNDFLOOR will move to the more progressive Georgia – are blows to our region’s entrepreneurial community.
Two barometers of thriving entrepreneurial ecosystems are the ability to fund and grow businesses from startup to profitable companies, and governmental support for that process. Though the Triangle continues to show proof of the former – many companies have raised funds and grown their businesses here – the failure of crowdfunding shows a lack of support from those helping to shape the economic future of the state.
Though GROUNDFLOOR’s news isn’t tied to the legislation (CEO Brian Dally confirmed this for me in a call today), the exemption that allowed intrastate crowdfunding in Georgia is what attracted the startup to launch there earlier this year. Relationships built with investors and developers in the months since made it the obvious choice for a headquarters, Dally says. The company will continue to employ developers in Raleigh – it will keep space at American Underground @Raleigh.
Here’s his email:
We are sad to report that the NC JOBS Act, which would have enabled intrastate investment crowdfunding of small businesses and startups in our state, is now officially dead. After the original crowdfunding bill (H680) passed the NC House last year by a vote of 103 to 1, the bill fell victim to political gamesmanship in the NC Senate. The Senate leadership tried repeatedly to attach other more controversial legislation to the NC JOBS Act, and each of those attempts either failed in the Senate or when sent back to the House. The final attempt today was a bill entitled H1224, which bundled together 6 other provisions for sales taxes and corporate welfare along with the JOBS Act, and was also tied to two other bills that would provide amendments to H1224 if it was passed. A very contentious debate about the other provisions in the bill raged over the last week between the Senate and the House, in committees, and in the caucuses, with the ultimate result a final vote today of 47-54 against the bundled bill. This was the final bill to be considered by the legislature for the current session, which will adjourn tomorrow.
The failure by the NC Senate to bring up H680 as passed by NC House for a vote on its own merits represents a significant lost opportunity for North Carolina small businesses, startups, and everyday investors. Ever since 2008, it has been extremely difficult for small business to get funding from banks and other sources, and the NC JOBS Act would have enabled a significant new source of funding all around the state, all while not costing the taxpayers a dime. Many other states have already passed similar crowdfunding exemptions over the last year, and businesses in those states are beginning to benefit. North Carolina was an early leader in proposing this idea, and the merits of it are clearly understood by state governments around the nation. Unfortunately the North Carolina Senate seems to have little interest in helping the small business community. Their top priority seems to playing political games to try and get corporate welfare for huge corporations from out of state.
The NC JOBS Act team would like to thank all of those who supported this effort along the way, including chief sponsor Representative Tom Murry, Speaker Tillis, Lt Governor Forest, the many sponsors from the NC House, the Triangle startup community, small business around the state, and the over 15,000 visitors to this blog who were tracking this effort, emailing and calling the legislature with their support, and spreading the word about the opportunity. We appreciate everything you did to help out.
Perhaps after the election this year, the new version of the NC Senate will be smarter than this one. We can only hope.