Law change could boost little-used state crowdfunding laws

Darryl IngramThe Associated Press
In this March 30, 2017 photo, former Green Bay Packers player Darryl Ingram poses in Milwaukee, next to the website for his personal consulting business, Videoscore, which helps high school athletes connect with college teams. Ingram wants to develop an app that matches players with programs and to launch the venture he's turned to an emerging form of state crowdfunding that lets entrepreneurs sell stock in their startups without going public. (AP Photo/Ivan Moreno)

Startups across the country could soon get a boost thanks to changes in federal rules that will make it easier for them to find local investors.

In the past five years, more than 30 states have legalized state crowdfunding, an offshoot of equity crowdfunding that allows small companies to sell stock but limits the sales to residents of their own states. Fewer than 200 companies have tried it, partly because most are prohibited from sharing links to their crowdfunding campaigns on social media, crowdfunding's primary fuel.

That restriction will be lifted once states incorporate into their laws modernized federal rules taking effect Thursday.

Supporters of state crowdfunding say part of the appeal is that local investors can help grow local companies. But it's risky for investors since many startups fail.