Crowdfunding is the practice of funding a project or venture by raising small financial contributions from a large number of people. The most well-known types of crowdfunding are internet-based and typically involve a donation instead of an investment. The Montana Legislature, however, enacted a unique kind of Montana-based crowdfunding law. Under the new law, the company must complete an application available on the Commissioner of Securities and Insurance website and pay a fee before soliciting investors. All investors in the crowdfunding project must be Montana residents. A maximum of $1 million can be raised (federal securities registration is required above this amount). Investors can invest a maximum of $10,000, however, accredited investors can invest more.
Businesses interested in crowdfunding must register with the Montana Secretary of State. All investment monies must be deposited into a Montana-accredited financial institution. The business must have a specific plan and purpose. All important information about the venture must be disclosed to the investor. Individuals who have been in trouble with the law or regulatory agencies may not raise money under this exemption.