A group of Floridians is working on legislation that would help give startups fewer restrictions on fundraising.
The task force is chaired by Willard Blair, a partner in the Tampa office of Shumaker Loop & Kendrick. His goal is to revise and recommend measures for Chapter 517, which focuses on the state's securities laws.
It was made effective in October 2015 and aimed at "crowdfunding" registration exemptions. The exemptions are made to help small businesses raise funding through the internet and broad-based marketing, circumventing the state securities' registration process.
However, the Sunshine State has one of the more strict statutes in the nation, according to the Florida Bar. Blair is hopeful with discussion and revision, the exemption can loosen the rules to make it easier for both small businesses and investors across the nation.
Tampa Bay Inno had a virtual sit-down with Blair to unpack the new position. Answers have been edited for length and clarity.
Funding has been an issue for a long time in Florida. A lot of people — both startups and investors I've talked with — have mentioned the legislation has been detrimental to them. So is that the No. 1 goal you're focused on — changing that language up in the state? You're right, there's a big concern as far as companies and startups getting a workable statute. Florida adopted a crowdfunding statute that mirrors the federal statute. However, it's very restrictive, and it's of little practical use. One of the things we intend to do is revise that statute to become much more usable, including by expanding the types of companies that can avail themselves of the statute and by increasing the amount that can be raised in the statute.
Can you talk a bit more about expanding the statute? There are a lot of intermediaries out there who provide a great benefit by connecting buyers and sellers of the business. They’re called “finders.” We are going to try to revise the statute to allow these finders to be compensated for their services without running afoul of the securities laws. Of course, we’re also going to have important investor protection measures, such as registration and mandatory disclosure of the fees paid to these finders.
What's your hopeful timeline for the statute? The Jan. 1, 2024, legislative session gives us a year. So we're already talking to legislators to let them know we're working on the project and to make them aware of the scope of the work.
What are you initially hearing in your conversations at the state level? Are legislators interested in this? There are legislators who are interested in it. As you know, there was a bill that the Office of Financial Regulation tried to pass last year [proposed by Commissioner Russell Weigel] that didn't make it through for a number of reasons. So what we have to determine is why that bill didn't make it through.
If the statute revision is passed, will the task force disband, or will it turn its attention to something else? It depends on whether it passes in part or in whole. If it passes in part, then we're going to continue to stay together and to determine why the parts of it that didn’t pass and rectify that.
Most states have passed some version of this legislation, but how unique is this to Florida in terms of restrictions? Delaware, for example, has a very modern act. We want the statute to be a more progressive statute like the Delaware statute. Our goal is to adapt a modern statute to make it more attractive for funds and professional investors across the country to invest in small businesses located in the state of Florida while at the same time ensuring protection for investors.
