CoCap – The Community Capital Symposium

CoCap – The Community Capital Symposium


Don’t miss this great event on September 2, Labor Day, in Oakland, California!

In partnership with SOCAP, an annual conference dedicated to increasing the flow of capital towards social good, we are proud to present CoCap – the Community Capital Symposium being held the day before SOCAP.

The Symposium is being sponsored by Cutting Edge Capital, the Local Investing Resource CenterHUB OaklandSustainable Business Alliance (a BALLE network), and Springboard Innovation.

Come learn about how communities can invest their money in local, social, and sustainable businesses.

We will be exploring the emerging world of Direct Public Offerings, local investing clubs and networks, crowdfunding, and other ways that communities can unlock previously inaccessible sources of local, grassroots capital.

Whether you are a business owner interested in raising money in your community, or a saver, investor, or community member that wants to learn about putting money to work locally, you will find plenty of inspiration, tools, and connections at the Community Capital Symposium.  Please join us!

Click here for more information or to purchase tickets!










Lessons learned from CEC’s DPO

Lessons learned from CEC’s DPO


Once again, we would like to thank our community for its wonderful support in our investment crowdfunding process!  We have about 40 investors with investment sizes ranging from $1,000 (our minimum) to $25,000.

We would like to take this opportunity to share what we learned.

On December 8, 2011, CEC submitted its application to the California Department of Corporations to conduct a Direct Public Offering.  On July 1, 2013, we met our fundraising goal.  Why did it take so long?  We were still new to the process of California DPOs and we had a lot to learn about what the state is looking for.  Also, the security we offered (a revenue sharing agreement) was unusual and the state had lots of questions about it.  Finally, we took a whole year to reach our fundraising goal after we received our permit from the state.  If we had it to do all over again, we think we could get it done much faster!

What have we learned from the experience?

Getting ready for filing

  1. Think through your offering carefully before submitting it and have multiple people proofread it – once you submit it, it is much harder to change or make corrections and errors can slow things down.
  2. Run multiple financial models of best and worst case scenarios and several in-between scenarios – make sure your financing plans make sense in every realistic scenario.
  3. Develop a marketing plan for selling your securities and prepare your advertising materials in advance – ideally they should be submitted with your application to the state regulators.

During the approval process

  1. Don’t procrastinate about responding to questions from the regulators – prepare a written response as quickly as possible.
  2. Don’t be afraid to call the staff person assigned to your case – he or she can often provide guidance on how best to respond to questions and comments.
  3. Make a list of people and/or groups of people that are good candidates to invest in your venture.
  4. Practice your pitch!  Your pitch may evolve throughout your offering and may differ depending on your audience but be prepared for every situation.  If necessary, practice with a trusted advisor.
  5. Get ready to hit the ground running when you get approval – it can happen when you least expect it and then the clock starts ticking!


  1. Even though you will probably have a year to raise the capital, try to give yourself a shorter deadline – when you know you have a year it is easy to procrastinate.  Also, a year can go by very fast – make the most of your time!
  2. Don’t be shy!  Call everyone you know (that is eligible to invest) and ask!
  3. Always ask your investors to help you find other investors.  Your investors can be some of your most compelling and effective advocates.

We had some great experiences throughout the process with investors, as well as potential investors that decided not to invest.  We were asked some great questions that helped us further define our strategy and goals.  We got a chance to talk about CEC and our passion for our work to lots of very interesting people – both our existing network and new allies we met as a result of the process.  We learned that the world of both accredited and unaccredited investors is amazingly diverse.  Some were very open to investing in our DPO which was admittedly a non-traditional investment.  Others had lots of questions and had trouble wrapping their minds around an investment opportunity that was so different from the mainstream model.

Some highlights:

  • Our first investor was our largest and contributed much more than cash – this person continues to make productive referrals and connections for us
  • Quite a few of our clients invested
  • Quite a few of our family members invested
  • Staff members with very modest salaries invested
  • Some of John’s former students from Presidio Graduate School invested
  • We announced our DPO at lots of public events but did not receive many investments that way
  • However, at one event, we ran into one of our investors and told him that we were still looking for more investors – he ran up to several of his friends at the event and encouraged them to invest – a few of them did!
  • Only a few of our investors were people we had never met before – most were connected to us in some way

We are thrilled to have completed the process!  We are already spending the funds we raised on some incredibly valuable things – a video about DPOs produced by Freerange, software to expedite the DPO process, and a web-based platform for DPOs.  These are expected to go live in the fall.

Thank you so much to all who invested as well as those who listened to all our pleas for investments for the last year.  We look forward to devoting our full attention to the movement to connect New Capital with a New Economy.

Public advertising of offerings open to accredited investors only

Under the new Rule 506(c), promulgated by the SEC pursuant to the JOBS Act, a venture will be able to advertise a securities offering as long as all the investors are accredited.

Under the existing Rule 506 (aka Rule 506(b)), public advertising is prohibited. An issuer will now be able to choose between using the “old” Rule 506, which does not allow public advertising, or the “new” Rule 506 which does allow public advertising but adds some requirements to the process. For example, under the “old” Rule 506, investors could sign a document stating that they were accredited. Under the “new” Rule 506, the issuer will be responsible for doing due diligence to ensure that all investors are accredited.

When offering securities under either the old or the new Rule 506, the issuer must file a Form D with the SEC. But under the new Rule 506, the form must be filed no later than 15 calendar days prior to the first use of general solicitation or general advertising for the offering (called an “Advance Form D”). Under the old Rule 506, you do not have to file the Form D until 15 calendar days after the first sale of securities.

The Form D will be amended to include more questions such as

• The issuer’s web site
• The amount raised from accredited versus unaccredited investors
• What fraction of offering proceeds was or will be used to repurchase/retire existing securities; to pay offering expenses; to acquire assets, otherwise than in the ordinary course of business; to finance acquisitions of other businesses; for working capital; or to discharge indebtedness
• The basis of qualification of accredited investors
• If you are using Rule 506(c), the types of advertising to be used
• If you are using Rule 506(c), how you will verify that all investors are accredited

If an issuer under Rule 506(c) is unable to or chooses not to answer all the questions in the Advance Form D, the issuer is required to file an amendment providing the remaining information within 15 calendar days after the date of first sale of securities in the offering.

Can you switch from a private offering (under old Rule 506) to a public offering under Rule 506(c)? Yes! All you would need to do is file an amended Form D 15 days before beginning general solicitation.

The SEC is also requiring temporarily that advertising materials used under Rule 506(c) be submitted to the SEC on its web site.

Under the proposed rule, the following statements are required to be included on written advertising materials:

• The securities may be sold only to accredited investors, which for natural persons, are investors who meet certain minimum annual income or net worth thresholds;
• The securities are being offered in reliance on an exemption from the registration requirements of the Securities Act and are not required to comply with specific disclosure requirements that apply to registration under the Securities Act;
• The Commission has not passed upon the merits of or given its approval to the securities, the terms of the offering, or the accuracy or completeness of any offering materials;
• The securities are subject to legal restrictions on transfer and resale and investors should not assume they will be able to resell their securities; and
• Investing in securities involves risk, and investors should be able to bear the loss of their investment.

There are additional statements required for private funds.

The new rule also requires the filing of a final amendment to Form D within 30 calendar days after the termination of any offering conducted in reliance on Rule 506 (old or new).

The new rule has not yet gone into effect – there is a comment period on the rule that is currently open. The final rule is expected to be adopted in the next month or two.

Will there be new requirements under state securities law for offerings under Rule 506(c)? There may very well be – it is important to check applicable state requirements before beginning a public offering under Rule 506(c).

For more information on the proposed rule, visit the SEC web page: and look at the release called “Amendments to Regulation D, Form D and Rule 156 under the Securities Act.”