One of the top questions for every start-up and entrepreneur is, “Where am I going to get my funding?” After all, having a great product is one thing, but bringing that product to market, attracting a customer base, and growing the company to keep up with demand all require infusion of capital. Of course, there are the traditional routes, from private equity, venture capital and angel investors, as well as loans from banks and credit unions. But as of this year in Illinois, there is another route for emerging companies to get the resources they need to propel themselves toward long-lasting success, and that new avenue is crowdfunding.

Crowdfunding, which involves raising many small amounts of money from a large number of people (typically via an Internet platform) to support a project or venture, has been applied in a non-equity capacity for some time. Sites like Kickstarter and Indiegogo have built their brands on connecting artists and innovators with a public willing to part ways with their money for a non-equity reward, whether that be a version of the product being produced or a t-shirt. Equity crowdfunding, however, takes this proven concept and provides backers with actual equity in the company seeking financial support. The practice of equity crowdfunding has become increasingly appealing to emerging technology companies and for real estate investment.

While technically Illinois has allowed intrastate crowdfunding since January 2016, a number of administrative requirements delayed the actual application of the law until 2017. That said, the Illinois intrastate crowdfunding law is now active.

Illinois Crowdfunding Resources

Anthony Zeoli speaking at 1871

Freeborn Partner Anthony “Tony” Zeoli is a prominent figure in the equity crowdfunding community, particularly in Illinois. Tony is the author of the Illinois Intrastate Crowdfunding Exemption and has built a reputation as a strong advocate for equity crowdfunding in Illinois. Here are some resources Tony has put together about Illinois’ equity crowdfunding law.

While intrastate crowdfunding in Illinois is a viable way to raise capital, growing companies should be aware that there are some limitations. Specifically, Illinois companies are currently capped at raising up to $4 million per year from crowdfunding, whether through debt or equity offerings. That said, this is still a generous allowance compared to other intrastate equity crowdfunding caps, and it far exceeds the $1 million cap set on the federal level.