When you first set out to start your business, one of the first major considerations is how much money you need to jump start your operations. Existing businesses sometimes also reach points where they need investors to provide additional capital to take business to the next level. In the past it has been difficult for small businesses in Florida to raise capital through the solicitation of private investors without triggering the strict, rigorous and costly filing requirements under state and federal securities laws. This article discusses two mechanisms that Florida businesses can use to raise capital through investment.


Crowdfunding can be summed up as the use of mass marketing to receive relatively small amounts of donations from large and diverse groups of people. Sites like Kickstarter, IndieGoGo and GoFundMe are perfect examples of sites that help businesses raise capital through crowdfunding on the Web. It is a great way for record labels to fund projects, artists to raise money for tours, and businesses to finance inventory or cover other operating expenses.

Florida has recently joined the list of states that have etched out a crowdfunding exception to state securities registration requirements. In the past, businesses hoping to raise capital through investment or funding from outside sources fell under what are called state “Blue Sky” laws. The crowdfunding exception to state registration requirements basically allows solicitation of potential investors without the hassle of a lengthy and costly registration process. While Florida’s exception is not the most user friendly, with careful planning you can raise up to $1 million. Here are the basics*:

  1. The issuer (the business raising the money) must be a for profit business entity formed under Florida law, and derive its revenues primarily from in-state operations;
  2. The offering must comply with the federal intrastate offering exemption—meaning the offering must be limited to Florida resident investors only.
  3. Transactions must be conducted through a state registered dealer or state registered intermediary.
  4. The maximum amount and issuer can raise is $1 million in a 12-month period.
  5. Investors who are not “accredited investors” as defined by federal securities law are limited in their investment to the greater of $2,000 or 5% of their annual income or networth of their annual income or net worth is less than $100,000, and 10% of their annal income or net worth, not to exceed $100,000, if their annual income or net worth is equal to or greter than $100,000.
  6. All investor funds must be placed into an escrow account in a federally insured financial institution and cannot be distributed to the issuer until the sales have reached a target amount set in the offering.
  7. Issuer must provide to each investor a disclosure document that includes financial statements. Depending on the amount of the offering, the financial statements must either by reviewed by independent accountants or audited.
  8. Investors may rescind any commitment to purchase up to 3 days before the offering deadline.
  9. No offering is allowed if the disqualification provisions applicable to the issuer, its management, and principal shareholders are triggered; and
  10. The issuer must file an offering notice with the Office of Financil REgualtion and pay a $200 fee at least 10 days prior to commencing and offering or dislaying the offering on a website. The notice must include certain information relevant to the issuer’s elegibility to tnegage in the offering, identity of the intermediary that will supervise the offering and name the financial institution that will hold the funds in escrow.

Private Offering Exemptions under Rule 506(b) or Rule 506(c) of Regulation D:

If you are able to meet the requirements under Rule 506(b) or Rule 506(c) of Regulation D under federal securities laws, you will be able to bypass state registration and exemption provisions and raise capital outside of Florida. You also will not be limited to a $1 million ceiling. For a full list of requirements Click Here.

Rule 506(b) allows up to 35 nonaccredited investors and an unlimited number of accredited investors. The one drawback is the strict prohibition on general advertising and general solicitation of investors. However, there is still potential to raise capital with targeted investors in mind.

Rule 506(c) on the other hand, allows general advertising and general solicitation (on websites, facebook, IG, etc.) but all investors must be considered accredited investorsAnd you, as the issuer, are required to verify that each investor is qualified as an accredited investor.

If you are interested raising capital for your business or project through one of these avenues, plan carefully and feel free to contact our offices if you need assistance.

*for a comprehensive and detailed list of all requirements see Fla. Stat. §517.0611

Jillene Doolkadir



Coral Springs

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