The Michigan Invests Locally Exemption (MILE), gives Michigan businesses and investors an opportunity not available on the federal level: the ability to raise capital by selling equity online. This democratization of funding can cause a fundamental shift in how businesses raise money.
But, as with any type of investment, taking other people’s money brings certain obligations. Most notably, businesses are expected to perform to investor demands. And when you take a small amount of money from a large number of people, you have a lot of demands to manage.
It is possible to structure your business to minimize the effect of having a large number of shareholders. For example, you could choose to sell a class of shares that have limited, or no voting rights, or the shares could be subject to restrictions on dividends, or any number of other restrictions. But, the more restrictions the less likely people will be willing to invest substantial sums of money into your business.
The first Michigan company to take advantage of MILE, Tecumseh Brewing Company, provides a great example of how Michigan businesses can raise money from the crowd while limiting exposure to a deluge of stockholder concerns.
The brewery is seeking to raise between $150,000 and $175,000. The minimum investment is $500 while state law sets the maximum at $10,000 (for a non accredited investor). The brewery is offering a revenue share in which 7% of the company’s monthly gross revenue is shared between purchasers according to their pro rata share. Purchases, however, are capped at earning 1.5 times their original investment. The company expects to pay each investor the maximum share by July, 2019.
Founders need to weigh their options when turning to the crowd and ask themselves a number of questions. What is the minimum investment you will permit? The lower the number, the more likely you can limit your investors’ control in your business. On the other hand, you will more quickly reach your funding goals through a few large investments. Would guidance from wealthier, experienced investors be an asset?
Anyway you cut it, investors will play a role in a crowdfunded business. Some businesses may seek maximum involvement, some businesses may want to limit it as much as possible. With the proper corporate structuring, your goals, whatever they may be, are possible.
For more information on the Michigan Invests Locally Exemption, check out our related posts:
The answer is legally complicated since the Food and Drug Administration (“FDA”) has defined the term “healthy” to apply to foods, not dietary supplements. On the other hand, in some circumstances, certain types of oils — like olive oil — are now eligible to use the “healthy” label. Thus, if your supplement is an oil […]
Read more about Can You Claim Your Dietary Supplements are “Healthy” on the Packaging?
If nurtured properly, trademarks can continue to function indefinitely, bringing continued and increasing value to the owners. There are, however, ways that trademarks can be “lost.” As an example, a trademark can be abandoned through lack of use or can be lost to the general public through the process of genericide. That happens when the […]
Read more about Avoiding “Naked” Trademark Licensing With Superior Licensing Agreements
Social media influencing has become a big business. As such, influencers need experienced internet lawyers to help with their contracts and other legal needs. In early October 2025, there was a bit of a stir on the internet concerning claims that the Government of Israel, through its Ministry of Foreign Affairs, was paying social media […]
Read more about $7,000 Per Post? How Much Do Influencers Get Paid?