Oregon Intrastate Offering Exemption (Crowd Investing Law)

Back to Atlas

The Oregon Intrastate Offering Exemption is a regulatory change that is designed to enable startups and SMEs to more easily raise funds via crowdfunding.
What are the main aims and objectives?

The Oregon Intrastate Offering Exemption (OIO) is designed with the following main aims and objectives:

  • Facilitate Local Investment: It aims to provide an exemption from the securities registration requirements to enable Oregon residents to invest in Oregon businesses. This local focus is intended to support Oregon's economy by channelling funding directly into the state's small businesses.
  • Access to Capital for Smaller Enterprises: The exemption serves as a means for smaller enterprises to access capital for launching new or expanding existing business ventures. By allowing these companies to raise money through small dollar amounts from the community, the OIO makes it easier for them to fund their growth.
  • Investment Crowdfunding: The policy supports investment crowdfunding, which involves raising capital through contributions from a large number of people, typically within the local community. This method of financing leverages the collective effort of individuals to support businesses they believe in.
  • Protection for Investors: While the exemption simplifies the process of raising capital for businesses, it also includes provisions that aim to protect investors. These provisions ensure that investors have access to essential information and are not exposed to undue risks.
How does the program work?

The Oregon Intrastate Offering Exemption is a provision that allows businesses within the state of Oregon to raise capital from Oregon residents through the issuance of securities and without having to register their securities with federal authorities, provided they comply with certain state regulations. This allows startups and SMEs to use crowdfunding to solicit investors who provide capital in return for securities issued by the company while staying exempt from the more stringent securities registration required at the federal level.

The exemption is specifically available for Oregon residents to invest in local businesses, reinforcing the intrastate character of the offering. To qualify, an Oregon business must be considered a "resident and doing business" within Oregon. This status can be determined if the business meets at least one of the following:

  • Deriving at least 80% of its consolidated gross revenues from operations within Oregon.
  • Having at least 80% of its consolidated assets located within Oregon at the end of its most recent semi-annual fiscal period.
  • Intending to use and actually using at least 80% of the net proceeds from OIO sales in operations within Oregon, in purchasing real estate within the state, or in rendering services within Oregon.
  • Having a majority of its employees based in Oregon

Businesses are limited to raising a maximum total of $500,000 under the crowdfunding exemption over the lifetime of the venture. Further to that they can raise up to $250,000 per offering. There are also restrictions in place for funders with an individual cap of $2,500 unless the individual can demonstrate they earned more than $100,000 a year for the previous two years and that their net worth is at least $200,000 (not including the value of their primary residence). If these requirements are met the cap increases to $10,000. It is also stipulated the company must provide investors with formal disclosures for their review before an investment decision becomes final.

What is the overall cost?

There are no direct costs associated with the exemption.

How was it implemented?

This is a state-based policy, though it was 16th in the nation and there are now over 30. The state’s regulators helped craft (and sponsor) this exemption so the state’s critics of crowd investing for ordinary citizens were invited to engage early, lowering barriers and building support. Oregon is considered a “flyover” zone between CA and WA so local capital was needed to develop a more entrepreneurial culture. Oregon is also a rural state, so new financial tools were needed. Banks are seeing this as a means to “bankability”, some creative financing resulting. 

Monitoring + Evaluation Methods
  1. Capital formation for Oregon-based startups and businesses
  2. Increase knowledge about investing for citizens,
  3. Improve the startup ecosystem.
What impact has been measured?

One transactional platform – that launched as a direct result of the law – has helped raise over $440,000 for over a dozen startup companies, fostered over 400 new investors, created a new statewide accelerator for use of the law, and has caused federal (USDA) and local foundations to provide support for capacity building across the state’s business infrastructure.

What lessons can be learned?

Local investing and crowdinvesting overall is still relatively new, requires education at all levels. Entrepreneurs often don’t have experience choosing and designing deal terms. Infrastructure for this kind of investing still very weak, though untapped capital potential is great. Benefits of this kind of community-based capital attracting new kinds of potential entrepreneurs such as Native Americans and rural.

CURATED BY

Heather Stafford

United States