Small California Businesses May Get Ok For Equity Crowdfunding

A decidedly non-tech enterprise like a restaurant won’t lure deep-pocketed venture capitalists seeking skyrocketing growth and a gargantuan payday. [...] he’d like to raise $1.5 million in two years from lots of mom-and-pop investors, offering them a slice of the business in exchange for small-scale investments — an approach called equity crowdfunding. “Here I am, 31 years old, full of energy, I operate two profitable business with really great numbers; we’ve proven ourselves in one of the toughest restaurant markets — and I can’t get a dime,” Pollak said. Two bills pending in the Legislature would allow small companies to do equity crowdfunding within California, reaching out to both “accredited investors” (higher-net-worth individuals presumed to have financial savvy) and “nonaccredited investors” (the general population). [...] last week, the Securities and Exchange Commission adopted new rules for medium-size companies nationwide to streamline selling securities. “These (proposed California) bills are trying to democratize opportunities for more investors who might have a passion for a particular industry and would like to invest,” said Eileen Loustau, senior vice president of Pensco, a San Francisco firm that helps people invest their retirement accounts outside the stock market — including in equity crowdfunding. “Any funding proposal under our bill would have to be reviewed by the California Department of Consumer Oversight,” said Scott Hauge, president of Small Business California, a trade group backing one of the California bills, AB722 from Assemblyman Henry Perea, D-Fresno. [...] Christina Oatfield, policy director of the Sustainable Economies Law Center in Berkeley, which backs another proposed bill, SB577, and drafted its language, said it is narrowly focused purposefully to thwart con artists. Companies would be able to solicit California investors via e-mails; announcements on their websites; advertising online; in newspapers and TV; and other methods. [...] they’d pay a fee of 0.4 percent of their issuance, which would allow the Department of Consumer Oversight to hire additional attorneys to vet proposed issuances. SB577, the Local Economies Securities Act from state Sen.