Almost half of all small and medium sized businesses within the United States fail within the first five years. One of the main contributing factors to that failure is the inability to raise enough money to operate. While there are many ways for businesses to raise operating capital, the most accessible and sometimes the most efficient way is through a process called equity-based crowdfunding—the offering of shares in exchange for an investment raised through an online portal. In 2012, after seeing the success of equity-based crowdfunding in other countries, the United States passed the Jumpstart Our Business Startups Act (JOBS Act) to make crowdfunding safer and more accessible for both entrepreneurs and investors. Not surprisingly, the federal law did little to make crowdfunding more inclusive and efficient. Therefore, state legislatures and governors began passing and enacting what they called “intrastate crowdfunding laws”—laws that permit local businesses to use crowdfunding outside some of the requirements of Securities and Exchange Commission regulations—to find new avenues for raising money and to create competition in an effort to attract new business to their states.
In early 2021, after much delay, Ohio became the thirty-seventh state to pass intrastate crowdfunding. However, the Ohio law is almost an identical copy of the JOBS Act and was passed with a greater focus on large corporations than with small and medium sized entities (SMEs) in mind. Therefore, this Note recommends that Ohio amend House Bill 312 to create a more efficient way for SMEs to raise funds, while also creating more inclusivity than other money raising options. The Note accomplishes this by using successful intrastate crowdfunding laws in other states and equity-based funding programs in other countries to build upon what the Ohio legislature created in HB 312. In the end, this Note contends that a more efficient and inclusive intrastate crowdfunding bill could be a spark to the economy, the job market, and innovation in Ohio.
Nathan E. Hill,
Late to the Crowd: How Ohio's Crowdfunding Bill Fails to Achieve Inclusiveness and Efficiency,
70 Clev. St. L. Rev.
available at https://engagedscholarship.csuohio.edu/clevstlrev/vol70/iss4/8