Broadening opportunities to invest and diversify the economy

While tourism and gaming have long been the main economic drivers in Nevada, the state has continually sought to diversify its economy by wooing technology companies to the state and supporting startups through a mix of state-sponsored incentives and incubator programs, like those offered by StartUpNV. And now, groundbreaking legislation has been signed into law to bolster economic diversification efforts by revolutionizing the state’s investment and entrepreneurial landscape.

As the non-profit accelerator and business incubator for scalable Nevada-based startups, StartUpNV provides entrepreneurs with access to both expert mentorship and a network of capital partners. As a result, StartUpNV has been dedicated to growing the pool of Nevada-based investors and championed Assembly Bill No. 75, which was passed by the legislature with overwhelming bi-partisan support and signed into law by Governor Joe Lombardo, to bring much-needed changes to securities regulations by establishing a new category of investor called a Nevada Certified Investor (NCI).

The new NCI category expands the definition of eligible investors and streamlines the investment process, thereby broadening the scope of economic opportunities in Nevada. According to estimates, the law will enable 30% of Nevada residents to meet intrastate financial criteria to become certified investors – versus less than 5% of residents under interstate Federal SEC rules. This statistic highlights the vast potential for increased local investment and economic growth throughout the state.

As defined by the new law, Nevada Certified Investors are Nevada residents who meet specific financial criteria, ensuring they possess the necessary fiscal resources to invest in startups. To qualify, individuals must meet one of the following criteria:

• Hold an ownership interest of more than 50% in a business that has reported a gross revenue of more than $200,000 or 2 1/2 times Nevada’s median household income (whichever is greater) on each federal income tax return filed for the past two years.
• Have reported an income on their federal income tax return for the previous calendar year that exceeds either $100,000 (for individuals) or $150,000 (for married couples filing jointly) or is above Nevada’s median household income (whichever is greater).

AB 75 also provides protection for investors by limiting investment to no more than 10% of an NCI’s net worth, disclosure of fees associated with investments, and owners seeking investments must pass a basic background check.

The new law creates another avenue for statewide economic growth as new Nevada Certified Investors bring their financial resources to the table to support Nevada-based startups. And there is no shortage of companies that can benefit from an expanded pool of investors.

For example, FundNV was created as an early-stage venture fund to support companies that participate in StartUpNV’s accelerator program. Thus far, FundNV and its affiliated investor syndicate has invested approximately $5.2 million in nearly two dozen startups. Before the new NCI law, FundNV investors had to invest at least $10,000 and be federally accredited investors (earning more than $200,000 annually or having a net worth greater than $1 million, not including the investor’s home). The next iteration of FundNV will be the first Nevada-based venture fund to take advantage of the new NCI designation, offering the opportunity for more individuals to invest at a lower entry level of $5,000.

Companies earn FundNV investments after they have proven their concept, achieved market validation, and generated revenue. StartUpNV also assists companies that are earlier in their business development, providing mentorship and education to entrepreneurs through its AngelNV program that culminates in an investment of at least $200,000 for one company. Offering its fourth session of bootcamps, AngelNV builds a bridge between entrepreneurs and angel investors by educating startups on raising capital and teaching federally accredited and now Nevada Certified Investors how to invest wisely in startups.

AngelNV program participants have seen great success. For example, SEE ID, a company that created a real-time asset tracking system, earned the $200,000 AngelNV investment in 2022 that was then matched with State Small Business Credit Initiative (SSBCI) funding. SEE ID has gone on to leverage its experience and education from the program to secure additional investments as well as federal Small Business Innovation Research (SBIR) grants, including $750,000 from the Air Force and was selected from more than 1,300 applicants for a grant from the Defense Logistics Agency. Participation in AngelNV provided SEE ID with the knowledge and tools to better position itself for federal grants and compete for future contracts, and the initial investments from AngelNV gave the startup the financial backing it needed to succeed.

With AB 75 and the Nevada Certified Investor designation, more investment opportunities will develop in Nevada for cutting-edge companies like SEE ID. And StartUpNV is excited to usher in this new era of economic development and business investment in Nevada that complements its ongoing commitment to broaden the investor network in the state. Unlocking a broader pool of financial resources and potential investors will support homegrown investment funds like FundNV and AngelNV that help early-stage companies to succeed in Nevada. Ultimately, with more successful startups calling Nevada home, the state’s economy will continue to grow and diversify resulting in more jobs and fueling innovation.