The US intrastate crowdfunding movement is developing so fast that even those operating in the space are finding it difficult to stay up to date. Last year in June, Vermont passed an online investing bill, named “Vermont Small Business Offering Exemption” (VSBOE) which allows local companies to raise capital from resident investors.
Investors have to be resident in the state of Vermont and cannot invest more than $10,000 per offering unless they are accredited investors, in which case no limit is set.
Issuers must to be companies organized in Vermont and they cannot raise more than $2 million. The local authority makes a distinction between those issuers seeking between $1 and $2 million and those raising less than $1 million. The former have to disclose audited financial statements, while the latter’s level of disclosure depends on the operational history of the company and the nature of the fund raise:
- Companies with less than a year shall provide a balance sheet listing their assets and liabilities in their offering document. The balance sheet need not be audited and may be prepared internally.
- Companies with more than a year should provide balance sheets and income statements for the three most recent fiscal years in which they operated. These balance sheets and income statements need not be audited and may be prepared internally; however, the Securities Division expects a company with audited or unaudited financial statements prepared by a third party to include them with the company’s offering document.
- Companies issuing preferred stock or debt instruments: Companies wishing to offer preferred stock or issue debt instruments under VSBOE shall include, in addition to balance sheets and income statements, statements of cash flow for the three previous fiscal years.
Furthermore the VSBOE allows advertising of the offering via social media, provided the communication clearly states that the investment opportunity is open only to investors resident in Vermont.
Vermont is one of the 20 states which have implemented online investing rules, of which we take a more in depth overview in out first US Intrastate Crowdfunding regulations Report.
Guidance on Preparing Offering Documents under VSBOE. Vermont Department of Financial Regulation.
About the author - Irene Tordera
Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.
During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.