Thanks to changes in federal and state statutes, Wyoming residents will be able - as of July 1 - to make investments through crowdfunding options. Information released by Secretary of State Ed Murray's office notes that crowd funding occurs when a business raises capital by seeking and receiving monetary investments by a large number of people.
The practice had not been available to investors until the Wyoming Legislature amended state securities statutes. Federal legislation was also changed a few years ago enabling individuals to invest in a non-publicly traded company if they were an "accredited investor" with $200,000 in hand or $300,000 in annual income or net worth over $1.0 million. Now, residents of Wyoming can invest in Wyoming businesses by joining others as investors.
The Secretary of State's information notes "crowdfunding platforms serve as portals where contributors can view, research and fund projects in various sectors, including technology, manufacturing and more." The office notes, "numerous crowdfunding platforms are active and raise millions of dollars for various projects."
There are five basic forms of crowdfunding:
1.Donations are a philanthropic gift with no expectation of a return.
2. Rewards are contributions in exchange for a possible pre-order of a product or other premiums.
3,4 and 5 Lending, Equity and Royalty all involve capital repayment, an ownership in a business or a share of revenue earned in return for an investment.
There have already been various crowd-funding operations that help non-profits in Wyoming, including the Powell Economic Partnership that used part of a $100,000 in federal funding to kickstart local efforts.
Will Dinneen of the Secretary of State's office said donation-based crowdfunding has been around for years in Wyoming and across the U.S. "WIN is different as it allows for the offer and sale of financial securities through crowd funding. Instead of receiving a gift or a possible tax deduction for a contribution, under WIN and other equity based models an investor would receive ownership shares in a business." Only Wyoming based companies and Wyoming investors can participate in WIN authorized efforts.
Wyoming statutes were changed in 2016 when Secretary of State Ed Murray noted that securities-based crowd funding would be incorporated into modernization of the Wyoming Securities Act. The agency included in proposed legislative changes WIN, the acronym for Wyoming Invests Now. The Cowboy State joined 36 other states in allowing crowd funding as a method individuals can use to invest in companies in Wyoming.
Once a business entity is registered with the Secretary of State's office they can initiate a crowd-funding model, which allows for equity or debt-based forms of securities or a combination of both. In return, investors are eligible to see a financial return on their money. Murray's information released earlier in June notes that "WIN opens new opportunities for potential adult investors."
Secretary Murray said, "WIN will open the door to community investors and allow them the opportunity to evaluate a good business idea, invest [their money] and seek a return on that investment." There are still risks with WIN investments, as there are with any participation in buying stocks, mutual funds or a variety of other products. Kelly Janes is director of the Secretary of State's Compliance Division. In an interview with AARPs Wyoming Newsletter she said "crowd funding is an exciting opportunity to raise capital but we want to caution investors to do their homework and contact our office to check the legitimacy of any investment offering."
The Secretary of State's office in Cheyenne can be reached at 307/777-7370 or email@example.com.
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