Crowdfunding in Wisconsin
Crowdfunding is a way to raise capital for a business by accepting investments of small dollar amounts from a larger number of people, typically via the internet. In other words, a "crowd" of investors helps to fund the business. Beginning June 1, 2014, a Wisconsin business may raise up to $1 million from state investors through crowdfunding portals, referred to in 2013 Wisconsin Act 52, as "internet site operators." The amount that can be raised increases to $2 million if the issuer has had an audit in its most recent fiscal year, and has provided the audit to prospective investors and the Department of Financial Institutions.
Any single purchaser may invest a maximum of $10,000 in a single crowdfunding offering, unless the purchaser is an accredited investor or a certified investor. "Certified investor" is defined as someone who has an individual net worth (or joint net worth with the individual's spouse) of at least $750,000, or had an individual income in excess of $100,000 in each of the two most recent years (joint income with spouse in excess of $150,000).
To view crowdfunding filings, go to https://www.wdfi.org/apps/crowdfunding/Menu/Index
See our FAQ-Crowdfunding page for more information about Crowdfunding in Wisconsin.
For NASAA’s Intrastate Crowdfunding Resource Center, go to www.nasaa.org/industry-resources/corporation-finance/instrastate-crowdfunding-resource-center/
To qualify for the exemption under Wis. Stats. Sec 551.202(26), issuers must:
- File a notice with the Division of Securities at least 10 days before commencing an offering – the notice must include a disclosure document, an escrow agreement with a Wisconsin-chartered financial institution, a financial audit (if applicable - upload with the disclosure document), and a $50 filing fee. File Online Here
- Comply with the "instrastate" exemption under federal law, meaning that all offers and sales must be to Wisconsin investors.
- Make the offer available through one or more internet sites that are registered with DFI.
- Provide a copy of the disclosure document to each prospective investor, hold all payments in escrow and not access them until the target offering amount has been raised.
- Provide quarterly reports to investors.
- Not be subject to the "bad actor" disqualification under federal securities law.
For more information, please refer to the statute 551.202(26), Wis. Stats.
Internet Site Operators
Under Wis. Stats. Sec. 551.205, an internet site operator used for purposes of the exemption under Sec. 551.202(26) must be organized under Wisconsin law and authorized to do business in Wisconsin, and registered with the Division. The fee for registration is $100.
The internet site operator must maintain records of the offers and sales of securities through the internet site, and may not offer investment advice or solicit purchases.
The internet site operator must also file quarterly reports with the Division to disclose the progress of the offerings being conducted under Sec. 551.202(26). The quarterly reports are due within ten (10) business days of each calendar quarter ending on March 31, June 30, September 30, and December 31. They can be submitted via email to DFISecurities@wisconsin.gov. The "progress of the offering" includes a) the total amount of securities offered; b) the total sales of securities made, as of the date of the quarterly report, to investors who are not accredited or certified; and c) if applicable, the termination date of the offering.
For more information, please refer to the statute 551.205, Wis. Stats.
2013 Wisconsin Act 52 also created an exemption for certain intrastate offerings that are not conducted through the internet and that meet the requirements of Wis. Stats. Sec. 551.202(27). Before the 101st offer of the security, the issuer must provide a notice to the Division with the filing fee of $50. No general solicitation or general advertising is permitted in connection with the offer to sell or sale of the securities. If submitting a financial audit with the notice filing, email the audit to DFISecurities@wisconsin.gov.
For more information, please refer to the statute 551.202(27), Wis. Stats.