Legislation sponsored by Assembly Republicans Parker Space and Alison Littell McHose making it easier for new and growing small businesses to find funding was approved Monday by the Senate Commerce Committee.
Under A-2073, which passed the General Assembly in March, small businesses can find investors to provide capital through a process known as crowdfunding to help them grow and create jobs. In crowdfunding, a start-up venture would publish information on its proposed business and invite potential small investors to offer capital. Once pledges for a project reach a predetermined threshold, the businesses would move forward.
“Difficulty accessing capital is one of the most difficult barriers to innovation our entrepreneurs face,” said McHose, R – Sussex, Warren and Morris. “Crowdfunding is one more source in the capital toolbox for business to access. It is a valuable way for the community to engage with and invest in local technology breakthroughs.”
This legislation is a version of the federal Jumpstart Our Business Startups Act, commonly referred to as the JOBS Act, which was championed by Congressman Scott Garrett (R-5). Parts of this law have yet to be implemented, leading to the introduction of the New Jersey version.
“This will help entrepreneurs star their own business, create jobs, and achieve their American Dream,” said Space, R-Sussex, Warren and Morris. “It’s an excellent way to develop a market for businesses while reducing the risk for investors. The bill significantly expands the pool of possible investors.”
State sponsored crowdfunding initiatives have proven successful in several states, including Georgia and Kansas.