Until June of 2014, only accredited investors could provide small businesses in Vermont the investment capital they need to establish themselves. Since then, the Department of Financial Regulation has made modifications to securities regulations that open up Vermont’s investor pool, benefiting Vermont entrepreneurs and the everyday Vermont investor.
The rule is called the Vermont Small Business Offering Exemption (VSBOE). The VSBOE creates the possibility for small Vermont businesses and start-up companies to raise up to $2 million in capital by selling shares in their companies to unaccredited Vermont investors who are at least 18-years-old. Whereas an accredited investor must pass through a lengthy registration process, earn at least $200,000 in income annually, and have a net worth of over $1 million, the VSBOE rule simplifies the security registration procedures, allows more Vermonters the ability to support Vermont entrepreneurs, and gives small Vermont companies additional options for financing. There’s a degree of protection built into the rule, as unaccredited investors cannot invest above a $10,000 limit.
Small business exemptions have existed in Vermont and other states for years, but old exemptions greatly restricted the amount of money that could be raised. And previous exemptions did not allow for direct solicitation to investors, making it that much harder to reach the investors needed to raise necessary capital. Under the new rule, Vermont small businesses can solicit directly to investors who reside in the state of Vermont. This is a crucial component and the primary intent of the regulation: Main Street Vermonters investing in small Vermont companies and keeping the money in-state.
Milk Money is an organization that looks to leverage the VSBOE while providing a service to Vermont investors and entrepreneurs. Milk Money is not a broker/dealer and does not charge performance commissions, instead charging upfront fees to use their online platform to promote fundraising campaigns for small businesses. Vermonters can discover local investment opportunities by examining live campaigns featured on their site, get tips on how to evaluate the opportunities, and invest directly on the site, knowing Milk Money ensures all the required legal documents have been filed with, and approved by, Vermont’s Department of Financial Regulation. Find out more about Milk Money here.
Investing is always a risk, and the revised regulations in no way reduce the risk to investors who choose to invest their money. But Vermonters who invest want the option to invest in Vermont, and the Vermont Small Business Offering Exemption allows investing options once only available to wealthy Vermonters, and gives all Vermonters a chance to invest in our own backyards.