A crowdfunding bill that many investors and entrepreneurs want passed in North Carolina has been dropped – for now – in a big House package. Is that reason to panic? Will crowdfunding fail again?

Trying to read the tea leaves, WTW reached out to people in the know:

  • Mark Easley, a Triangle angel investors and a big supporter of crowdfunding legislation
  • And WRAL political reporter Mark Binker, who reported in detail on what happened at the General Assembly on Tuesday.

Binker says differences “over language” in the crowdfunding bill language “appear” to be the hang up. And he says the move in the House under Speaker Tim Moore to drop it out of a larger bill (NC Competes) in order to speed up the passage of new incentives money doesn’t necessarily mean crowdfunding is doomed.

“I think the differences are over ‘how’ not ‘should we,’ if that make sense,” Binker says.

Different crowdfunding bills have been introduced in the so-called “short session.” Binker points out that since legislators are scheduled to be in Raleigh only for a brief time they are under pressure to get some bills done quickly. And Gov. Pat McCrory has been insistent on getting coffers for economic recruitment replenished.

“That actually caused about a week delay in the bill,” Moore, R-Cleveland, told Binker about the crowdfunding component. “There’s still debate on the language. So, in consultation with the bill sponsors, they said just pull it out and run it as a separate bill. We don’t want to see the economic development bill held up over that one component.” 

Words at Crux of Problem, not Concept

Easley concurs on the language differences as being the big problem, not a dispute over the concept of allowing startups to raise smaller amounts of money from investors who have been barred in the past based on regulations dictating net worth and other requirements. 

“The legislative staff and sponsors are still finalizing the language for a stand-alone version of the crowdfunding bill, which is a good thing,” Easley explains.

“Last session the H680 [House bill 680]  version of the NC JOBS Act crowdfunding bill was passed by the House by 103 to 1 as a standalone bill, and was also passed by the Senate as part of a couple of different packages that were rejected by the House because of the other controversial bills that were tacked on. So this year we are recommending that a slightly improved version of the NC JOBS Act be introduced as a standalone bill that can be passed quickly by both chambers.”

The Context of the Delay

Binker reiterates that the larger context of what’s happening on economic recruitment must be kept in mind.

“As to timing: Remember, McCrory really wants the JDIG /replacement bill.” he says, referring to Job Development Investment Grants.

“He’s been saying he needed it yesterday for a few weeks now, and [Commerce Secretary John] Skvarla basically said the same thing today. One gets the sense they’re in the hunt on a few things but have nothing to take to the companies they might be courting. So anything slowing down the omnibus might be seen as unwelcome.”

New Bill Coming

Meanwhile, Easley says he is excited about work that is underway on a unified bill.

“The formal name of the proposed crowdfunding exemption bill is the NC Providing Access to Capital for Entrepreneurs and Small businesses Act (NC PACES Act),” Easley says.

“I am expecting the NC PACES Act version of the crowdfunding bill to be filed shortly.”

Next Steps

So what are the next steps?

Binker notes Mother Nature is having an impact. 

“The House is not doing any more business this week. They’ve been scared off by the weather,” he says.

“That means they’ll come back next week and maybe work on this thing. I’d expect them to move the omnibus [bill filed Tuesday] as soon as is practical. 

“Assuming they don’t just add crowd funding back in along the way (possible if they get a consensus measure) the omnibus will probably shoot through the House and land in the Senate where the honorables are a lot more skeptical.
If they really do run crowd funding as a different bill, they have several flavors to choose from. They’ll have to pick one and start running it through the committee process.”

Easley remains positive.

“We are hopeful that the General Assembly will act quickly to get this bill passed on its own merits so that we can get started crowdfunding our start-ups and small businesses all around the state using this safe, fair, and easy to implement exemption, all at no cost to the taxpayers,” he says.