United States: Crowdfunding Arrives In Wisconsin

A new avenue for raising capital is now available for companies in Wisconsin. Companies formed and operating in Wisconsin that are willing to limit offers to Wisconsin residents can now use crowdfunding to raise capital. With its new crowdfunding law, Wisconsin has joined a handful of other states to adopt state-based crowdfunding while we continue to wait for the Securities and Exchange Commission (the SEC) to adopt final rules implementing the crowdfunding provisions in the JOBS Act nationwide.1

Wisconsin's crowdfunding provisions are contained in amendments to the Wisconsin Uniform Securities Law that took effect on June 1, 2014.2 These amendments also expanded a number of existing registration exemptions that should provide greater flexibility in raising capital in the state.

Crowdfunding in Wisconsin

Two new provisions of the Wisconsin Uniform Securities Law permit crowdfunding in securities offerings. The more traditional crowdfunding provision is in Wisconsin Statutes Section 551.202(26). It has the following requirements:

  • The issuer of the security must be a business entity organized under Wisconsin law and authorized to do business in Wisconsin.
  • The transaction must qualify for the federal intrastate offering exemption in Section 3(a)(11) of the Securities Act of 1933 and Rule 147 thereunder.
  • There is a limit on sales in reliance on the exemption of $1 million, which increases to $2 million if audited financial statements are available. The limit applies to all sales made in reliance on the exemption within 12 months of the first offer or sale. The limit excludes sales to accredited investors, certified investors or institutional investors as well as to officers, directors, partners, trustees and individuals occupying similar status or performing similar functions, or to a person owning 10% or more of the outstanding shares of any class of securities of the issuer.
  • No more than $10,000 may be accepted from any single purchaser unless the purchaser is an accredited investor or certified investor.
  • The offering must be made exclusively through one or more Internet sites that are registered with the Wisconsin Division of Securities. Wisconsin Statutes Section 551.205(1)(b) contains the requirements for a site to register.
  • At least ten days before the commencement of the offering, the issuer must file a notice with the Wisconsin Division of Securities that includes a copy of a disclosure statement that must be provided to investors and an escrow agreement with a bank or other financial institution chartered in Wisconsin that will hold the offering proceeds until the minimum offering amount specified in the disclosure statement is raised. The disclosure statement also must contain a deadline for the minimum offering amount to be raised. The escrow agent must notify the Wisconsin Division of Securities of the receipt of payments.
  • The issuer must not be an investment company or a private fund or other type of entity that would be an investment company but for the exclusions in Section 3(c) of the Investment Company Act.
  • The disclosure to investors must include specific cautionary language and each purchaser must provide a specific acknowledgment (which in most cases should be placed in the subscription or purchase agreement for the offering).
  • The issuer must obtain evidence from each purchaser that the purchaser is a resident of Wisconsin and, if applicable, is an accredited investor or certified investor.
  • The issuer may not have offered or sold a different class or series of security pursuant to Wisconsin Statutes Section 551.202(26) or (27) during the immediately preceding 12-month period.
  • The "bad actor" disqualification in federal Rule 506(d) applies.
  • The issuer must provide quantity reports to all investors while the securities remain outstanding.
  • There are no express limits on how investors can be solicited, so it appears that an issuer can solicit investors and direct them to the Internet site where the offering is being conducted. However, the intrastate offering exemption in Section 3(a)(11) and Rule 147 does limit the ability to make offers to investors who are not residents of the state in which the issuer is located.

Wisconsin Statutes Section 551.202(27) provides an alternative crowdfunding vehicle in Wisconsin. Many of its requirements are the same as Section 551.202(27), including the issuer being organized in Wisconsin, the issuer meeting the requirements of the federal intrastate exemption, the limits on the offering size and the investment amount per investor, and compliance with the "bad actor" disqualification in federal Rule 506(d). Key differences include the following:

  • There is no requirement to use a registered Internet site to conduct the offering.
  • General solicitation or general advertising is prohibited unless it has been permitted by the Wisconsin Division of Securities.
  • All funds received from investors must be deposited into a bank or other financial institution chartered in Wisconsin, and all funds must be used in accordance with representations made to investors. Note that this requirement appears to be something less than the escrow account requirement under Section 551.202(26).
  • Before the 101st offer of the security, the issuer must file a notice with the Wisconsin Division of Securities. The statute does not contain any specific disclosure requirements for investors other than notifying investors that the securities have not been registered under the Wisconsin Uniform Securities Law and providing notice of the limitations on resale under Rule 147.

Other Amendments to Wisconsin Registration Exemptions

The amendments include a number of other changes to increase the flexibility of registration exemptions for offerings in Wisconsin.

  • Exemption for Offers and Sales to Sophisticated Investors. Wisconsin Statutes Section 551.202(13) exempts offers or sales to institutional investors and accredited investors. The amendments expand the exemption to also cover certified investors, but only as long as the offering meets the requirements for the federal intrastate exemption under Section 3(a)(11) and Rule 147, and the issuer complies with "bad actor" disqualification provision in federal Rule 506(d).
  • Exemption for Offers to Not More than 100 Residents. Wisconsin Statutes Section 551.202(14) exempts offerings to not more than 25 persons in Wisconsin (excluding institutional investors and accredited investors) subject to certain conditions. The amendments create a new exemption in Section 551.202(14m) that exempts any transaction pursuant to an offer directed to not more than 100 residents of Wisconsin, excluding institutional investors, accredited investors and certified investors. Other requirements for the new exemption include that the issuer be a business entity organized in Wisconsin with its principal office located in the state and a majority of its full-time employees working in the state, no general solicitation or general advertising unless it has been permitted by the Wisconsin Division of Securities, and compliance with the "bad actor" disqualification provision in Rule 506(d).
  • Exemption for Not More than 100 Investors. Wisconsin Statutes Section 551.202(24) exempts an offering if, after completion of the offering, not more than 25 persons (excluding institutional investors and accredited investors) hold the issuer's outstanding securities subject to certain conditions. The amendments create a new exemption in Section 551.202(24m) that exempts an offering if, after completion of the offering, not more than 100 persons directly or indirectly hold all of the issuer's outstanding securities, excluding institutional investors, accredited investors and certified investors. Other requirements for the new exemption include that the issuer be a business entity organized in Wisconsin with its principal office located in the state and a majority of its full-time employees working in the state, there is no general solicitation or general advertising unless it has been permitted by the Wisconsin Division of Securities, and compliance with the "bad actor" disqualification provision in Rule 506(d).
  • Definition of Certified Investor. Most of the exemption provisions in the amendments reference a new category of investors called "certified investors," who are essentially individuals with net worth or income somewhat lower than the thresholds to be an accredited investor. A certified investor must have (1) net worth individually or jointly with a spouse of at least $750,000, including the value of the individual's primary residence, or (2) individual income in excess of $100,000, or joint income with a spouse in excess of $150,000, in each of the two most recent years and a reasonable expectation of reaching the same income level in the current year.


1 See our November 14, 2013 alert for more detail on the SEC's proposed rules for crowdfunding. Crowdfunding is also permitted through sites that are limited to accredited investors as well as through crowdfunding sites that raise money other than through the offer and sale of securities.

2 The amendments were adopted in 2013 Wisconsin Act 52 on November 7, 2013.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.