Blue Hill Coop has become the first company in Maine to take advantage of state crowdfunding rules that went into effect on Jan. 1, 2015.
While the term crowdfunding is most often associated with websites like Kickstarter, where companies can raise significant amounts of money from the crowd in return for gifts or products, the crowdfunding we’re talking about (and which Maine’s Fund-ME program has allowed since January 2015) allows businesses to raise capital by selling debt or equity in their business to anyone.
Investing in businesses in this manner is usually restricted to high-net-worth individuals, known as accredited investors. Maine’s crowdfunding rules change that, though there are some restrictions. Individuals can’t invest more than $5,000 and companies can only raise up to a total of $1 million in any 12-month period.
The Blue Hill Coop plans to secure $6 million to relocate and expand its business, including $2 million from small investors ($1 million in each of 2016 and 2017).
Why no businesses until now have taken advantage of Maine’s crowdfunding rules is likely due to the large amount of paperwork and internal vetting necessary to make a security offering.
