New SEC rules for crowdfunding of startups took effect Monday, action that drew praise from a leading Triangle attorney who focuses on venture capital. The National Venture Capital Association also salutes the kickoff. But in North Carolina, crowdfunding remains far from reality – and even a proposed bill is “a very conservative small step forward,” Raleigh attorney Jim Verdonik says.

“Giving unaccredited investors the ability to invest in Title III offerings is a huge step forward,” says Verdonik, who works for the law firm Ward and Smith. (Check out more reaction/analysis from Benji Jones, a partner at Smith Anderson, in the blog just linked to this post.)

But taking that step took a long time.

Title III refers to JOBS Act (Jumpstart our Business Startups Act) passed by Congress and signed by President Obama in 2012, with crowdfunding being part of that bill.

Here’s how the SEC defines it:

“Crowdfunding is an evolving method of raising capital that has been used to raise funds through the Internet for a variety of projects. Title III of the JOBS Act created a federal exemption under the securities laws so that this type of funding method can be used to offer and sell securities.”

Opening up investment to more people is expected to provide a boost in capital for new and emerging companies.

“Full implementation of the crowdfunding provisions included in the JOBS Act has been a long time coming and we are pleased to see the SEC finally push the ball across the goal line,” said Bobby Franklin, CEO of the NVCA, which was a big backer of the JOBS Act.

” Anything we can do to help innovative startups raise the capital they need to grow and scale is good for the entrepreneurial ecosystem.”

Verdonik is excited about what will happen next.

“We will finally have a chance to find out whether Americans are smarter than our Government thinks we are.,” he says. “Securities laws before crowdfunding were based on the concept that the same Americans who buy cars and houses are not smart enough to invest money in a software company.”

And he expects good things.

“Personally, I think people are smart,” says Verdonik, who has worked with technology companies at virtually all stages of development. “It’s just that until crowdfunding came along there was no way to comparison shop investments like you can do for cars, houses and other items on the Internet.

“If securities laws prevent comparison shopping, of course investors will lack information to make good decisions. So, it was a self-fulfilling prophesy that people would make bad choices .

“Now you can compare lots of investments “

Yet Verdonik also is a realist.

“I’m sure there will be a few bumps in the road as Americans learn to shop for investments the same way they use the Internet to shop for anything,” he says.

Bypassing the state?

As for investors in North Carolina, the wait continues – at least for state rules. More than 30 states have already updated their laws to deal with crowdfunding. Not here.

That’s not to say crowdfunding can’t happen, however, as Verdonik points out.

Bills including crowdfunding as part of a much larger economic package were introduced in the General Assembly last week. The language is the same as a bill that drew bipartisan support last year but failed to secure passage.

So does SEC approval of crowdfunding rules mean anything for North Carolina?

“Only in the sense that Federal crowdfunding shows just how antiquated North Carolina securities laws are,” Verdonik replies.

“The rest of the world is using the Internet while North Carolina laws are from a time when people mailed letters to one another using the Post Office. The old laws meant to regulate 1930s communications just no longer make sense.”

WTW asked Verdonik to review the new North Carolina package last week.

“I think the North Carolina law is a very conservative small step forward,” he says.

Yet alternatives exist.

“Right now most securities offerings virtually ignore North Carolina securities laws by using Federal exemptions that preempt state law. So, we should not pretend state crowdfunding is loosening North Carolina securities regulation. It is simply trying to attract businesses to conduct offerings in a way where North Carolina securities regulators can see what is going on,” Verdonik explains.

“State crowdfunding might get North Carolina securities regulators back in the game for a few more offerings. If North Carolina securities regulators impose unrealistic regulations, however, businesses will continue to use federal exemptions that preempt state law.

“Hopefully, a positive experience with this very conservative law will encourage North Carolina to broaden the law over time to make it usable by more companies.”

But does the North Carolina bill have a chance to pass?

Says Verdonik: “I never predict what politicians do.”

Even the NVCA wants more.

“The bipartisan JOBS Act was a great first step in helping to provide startups with greater access to capital; however more is yet to be done,” its CEO said in a statement.

“As a next step, we urge lawmakers to consider ways we can build on the bipartisan momentum to improve the vibrancy of the IPO market as well as address liquidity challenges facing companies after they onramp to the public markets.”