MNvest is the name of a new Minnesota state law allowing crowdfunding for small companies in Minnesota. MNvest allows companies to raise capital online from unaccredited investors.
MNvest is overseen by the Minnesota Department of Commerce. Unlike other crowdfunding websites—like Kickstarter, GoFundMe, and Indiegogo—MNvest allows companies to raise capital in exchange for offering equity ownership of the company. Minnesota’s effort to legalize equity crowdfunding was led by entrepreneurs who want to share ownership while building new businesses.
MNvest is one exception to the federal securities laws, allowing business owners to raise capital without federal securities registration. MNvest allows business owners to advertise to seek investors—including unaccredited investors—to buy a small amount of ownership (typically $10,000 maximum for unaccredited investors) in the company. MNvest allows an unlimited number of investors.
Like any new law, the government is still getting its arms around many aspects of implementation. There are also significant limits and restrictions designed to avoid defrauding investors.
How to Start Crowdfunding in Minnesota
To raise funds in exchange for ownership in your company, there are two steps:
1. Select Your Securities Exemption
The first step is identifying whether MNvest or another securities exemption is right for you. Other ownership crowdfunding options include Reg A, SCOR, and Minnesota Statutes chapters 504, 506(b), and 506(c).
2. Prepare Your Crowdfunding Legal Documents
The second step is preparing your securities offering in compliance with the statutory exemption you have chosen. Compliance with securities laws is a big deal to avoid fines from the government and legal trouble from investors who claim they were misled by you.
Both of these steps require an attorney experienced in this area of securities law. You are welcome to contact us. We can help you identify the right securities law exemption to raise funds for your company. Alternatively, you can search online. Make sure the attorney you select is experienced in securities offerings to unaccredited investors under MNvest, SCOR, and related securities exemptions in Minnesota.