In the race between states vying for startup businesses, Texas
proposes to sweeten the deal with a new proposal that exempts
crowdfunding initiatives from state securities laws.
For those new to the concept, crowdfunding refers to a method of
raising money from a large number of small investors, typically
through an online portal or platform, in order to finance a new
business venture. Entrepreneurs who raise money through
crowdfunding often use social media to share their efforts, which
increases traffic to their crowdfunding page. Certain crowdfunding
sites, such as Kickstarter, operate on a donations-based model.
That is, individuals contribute to their preferred startups and
causes without receiving any equity or interest in return.
Consequently, Kickstarter campaigns are not considered securities
offerings.
