In Texas, investors are now able to take advantage of the first crowdfunding project designed specifically for the retail sector. Launched by MassVenture, the investment crowdfunding portal is based in the Dallas-Fort Worth area and will give any resident of Texas the ability to invest in a multi-million dollar real estate project by making a minimum investment of $500. Interested investors are able to sign up on the portal free of cost and view offerings for a period of 21 days during the pre-funding phase before the crowdfunding campaign will actually begin. Recognizing that making such an investment is a big step, MassVenture has also made it possible for investors to pose questions to the equity-offering issuer regarding the property, project, and even the principals involved in the project. Given the risk that can be associated with such investments, this level of transparency provides prospective investors with tremendous transparency into project offerings. To date, crowdfunding has proven be an effective method for generating interest in investments quickly; however, SEC rule restrictions have prevented many investors from participating until recently.
New Crowdfunding Rules Issued in Texas
MassVenture has been significantly involved in the process of launching crowdfunding in Texas, even to the point of assisting in drafting and advocating for the recently enacted crowdfunding rules that became effective in Texas in late 2014. Texas was the 13th state in the country to enact crowdfunding rules. The new crowdfunding rules recently released in Texas are distinctive in that they open investments up to an entirely new class of investors. This class includes non-accredited investors who have a net worth of less than $1 million and an annual income of less than $200,000. Traditionally, such investors have been prohibited from investing in early stage venture funding due to federal regulations.
This has left many investors unable to take advantage of the many benefits offered by crowdfunding. While there has been significant discussion throughout the country regarding the potential to make crowdfunding available such a class of non-accredited investors, the newly issued rules in Texas and subsequent platform launch by MassVenture represents the first time that non-accredited investors have been able to enjoy the same crowdfunding investing opportunities as more affluent investors.
Some Restrictions Still Apply to Crowdfunding in Texas
Under the new rules in Texas, companies are allowed to raise up to $1 million annually via an approved crowdfunding portal in Texas. Texas residents may invest up to $5,000 per company, but only accredit investors may invest any amount they so choose. The new rules further stipulate that only residents of Texas are able to invest in the offerings. Furthermore, only crowdfunding portals operating in Texas are allowed to manage the investments. All such crowdfunding portals must be approved by the Texas State Securities Board. The approval process began in late November, with San Antonio-based MassVenture becoming the first publicly issued investment crowdfunding project to be approved and launched in the state of Texas.