State crowdfunding is growing in importance. This is driven in part by the inability of the SEC to finalize the Title III crowdfunding regulations (which the JOBS Act required to be finalized long ago).
Both Washington and Oregon have passed state crowdfunding laws (and many other states have as well).
And you might be wondering how Oregon’s crowdfunding law compares to Washington’s crowdfunding law.
And you might be curious because Oregon’s law has already been used by a bunch of companies, and Washington’s has not yet been used at all.
Crowdfunding: Oregon Law vs. Washington Law
Here are the highlights of the Oregon law, and which probably explain why Oregon’s law is being actively used and Washington’s is not.
- Oregon’s law does not require the use of an escrow agent. In Washington, you can’t proceed without first hiring an escrow agent.
- Oregon’s law does not require the pre-approval of the state securities regulators before a company can proceed.
- The Oregon Crowdfunding Form is substantially less complex than the Washington Crowdfunding Form.
- Oregon’s law does not require the public disclosure of executive and director compensation. See Public Disclosure of Executive and Director Compensation.
- Oregon’s law allows the use of debt. Despite the fact that the Washington crowdfunding statute says that it can be used to raise money through the sale of securities, and the Washington securities act defines debt as a security–final regulations from Washington prohibit the sale of debt (such as convertible debt) in a crowdfunding offering.
Here is the Oregon Crowdfunding Law.
What Washington Can Do?
I think Washington should simplify its law. Let’s strike the escrow requirement. Let’s strike the pre-approval requirement. Let’s strike the public disclosure of executive compensation. If there is a concern about potential abuse–let’s reduce the overall amount that can be raised from $1M during any 12-month period to something less.
In any event, it is disappointing we have hit hitches in Washington and our law is not yet being used.