By LAURA LOREK
Reporter with Silicon Hills News
Nathan Roach, CEO of Mass Venture, an equity-based crowdfunding portal in Texas
The San Antonio-based crowdfunding portal will focus on raising money for real estate ventures, but it is open to all types of equity-based crowdfunding ventures, said Nathan Roach, the company’s CEO. The portal is based at Geekdom in San Antonio.
It’s the first crowdfunding portal approved to receive investment from anyone – not just “accredited investors,” who are also known as high net worth individuals, under the Texas State Securities Board’s new intrastate crowdfunding rules.
The first crowdfunding project is set to launch on the site March 1st, Roach said. The minimum investment a Texas resident can make through the Mass Venture site in a company is $500, Roach said.
Any business can raise up to $1 million on the Mass Venture crowdfunding portal, but Roach expects the sweet spot for fundraising to be around $500,000.
Mass Venture, controlled by a parent company called Hive Equity, has several registered users, Roach said. It’s in the process of vetting the companies now, he said.
Mass Venture received its certificate of registration Feb. 9th, said Bob Elder, spokesman for the Texas State Securities Board. The second portal to be approved is CrudeFunders Portal in Houston. It received a certificate of registration Friday, he said. CrudeFunders is focused on raising money for companies specialized in the oil industry, according to its website.
In addition to the portals that have received certification, six applications to operate equity-based crowdfunding portals in Texas are currently pending, Elder said.
Approving the portals is one of the first steps to getting deals funded in Texas. The next step is for the portals to vet the companies and for deals to go live on their websites. That means that the average person, registered with one of the portals, will be able to invest in a company and have ownership in that company.
Equity-based crowdfunding differs from mainstream crowdfunding sites like Kickstarter and IndieGoGo which allow people to raise funds for a project or company. In those cases, the crowdfunding is rewards-based. That means people backing the project do not have ownership of the ventures. They simply receive a reward for giving them money. In some cases, it’s pre-sales at a discounted price of a new product that the inventor wants to take to market.
Equity-based crowdfunding from accredited investors has been legal in Texas and nationwide
The Texas State Securities Board approved the state’s equity-based intrastate crowdfunding rules Nov. 17th, Elder said. Those rules allow a company to raise money from mom and pop or the general public for their ventures through state approved crowdfunding portals.
Texas’ rules allow a company to raise up to $1 million a year through an approved Texas crowdfunding portal. Any resident of Texas can invest up to $5,000 per company. But only accredited investors, high net worth individuals who have assets of more than $1 million excluding their home and net income annually of $200,000, may invest any amount.
And only Texas residents are able to invest in the deals. And only Texas crowdfunding portals are able to manage those investments.
Texas is one of a handful of states that has adopted its own crowdfunding rules. The U.S. Securities and Exchange Commission is expected to finalize national rules to make equity-based crowdfunding legal nationwide as a provision of the JOBS Act of 2012. But the rules have not yet been released. So some states passed their own regulations in advance of the SEC.
For more information on Texas’ crowdfunding rules, please visit the Texas State Securities Board.
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