One week ago, GROUNDFLOOR announced a landmark securities filing with the federal government and five state governments. But what does this really mean? First, it is important to understand that when you invest in a project through GROUNDFLOOR, you are purchasing a security (e.g., a stock or bond; most types of investments). The sale of securities is regulated by both federal and state governments. Anyone seeking to sell securities must comply with both federal and state law.
These rules and regulations are designed to protect investors from unscrupulous actors. Certain exemptions from these laws exist that allow companies selling investments to avoid regulation by catering only to the wealthy. These exemptions lower the cost of compliance, but at the expense of transparency and access for retail investors like you. That is why you'll see other platforms sell to "Accredited Investors" only. As Brian articulated last week, we will never take that path of least resistance because that's not what we believe in. Instead, we are actively working with our regulators to bring GROUNDFLOOR to everyone.
All our investments to date have been offered only in Georgia because we have been using Georgia's innovative crowdfunding laws to pilot and refine the way GROUNDFLOOR works. Of course, we want to service investors across the country. This means we must embark upon the long and expensive process of registering our offering with the authorities in each new state we enter. We have now begun this process in Virginia, Pennsylvania, Massachusetts, Illinois, and Arizona. Investors in these states can expect to put their money to work with GROUNDFLOOR in the very near future.
As a regulated entity, GROUNDFLOOR takes pride in transparency. Our Georgia investors have access to comprehensive documents about their investments with us. Investors in our new states can expect the same. State regulators and the Securities Exchange Commission will review our documents and the features of our offering before we are allowed to take investments. These rules and regulations require hundreds of hours of legal work and many hundreds of pages of documentation. It is a very high bar. Filing an offering with both the federal and state regulators can cost as much as a small house, but we accept it as what we must do in order to realize our vision of creating a new kind of finance that is open to everyone.
As we progress with the regulatory process you will notice changes to the website. These changes are designed to accommodate investors in new states where we can solicit investments. If you are a different state, stick with us. We will be expanding to your state as fast as we can. In the meantime, we appreciate your interest and support, and will happily listen to your suggestions and comments on how you will use GROUNDFLOOR and what opportunities exist in your state. Have one now, or a question about securities regulation? Use the comments below and we'll meet you there.