Insights from Innovators
Over the years, we’ve had clients from across the US complete a wide variety of capital raises. We followed up with a few of them to hear about their experiences and the advice they would offer other businesses considering a public raise.
Mission Driven Finance
What does Mission Driven Finance do and what are its guiding principles?
Mission Driven Finance is an impact investment firm dedicated to building a financial system that ensures good businesses have sufficient, affordable access to capital. Built from the ground up with a single purpose—to make it easy to invest in your community—all our funds and structured products are designed to close financial gaps that will close opportunity gaps. We work with local and national investors to help them create the impact they want, and work with businesses and community partners to help them get the capital they need.
We have three guiding principles:
Community Connected Capital – We use a network mindset to source, underwrite, and support investments. This helps us build solutions for and with the community.
Employers as Change Agents – Impact isn’t just for nonprofits. We believe small businesses are critical components of thriving communities, and help them to intentionally use their operating expenses to create positive change.
Strength in Diversity – We’re stronger together, as a team and as a society. Diversity is not an afterthought for us but rather core to our ability to source deal flow and underwrite effectively. With a variety of lived and worked experiences, the team is collectively able to recognize untapped market opportunities and partner sensitively with traditionally underserved communities, supporting our vision of an inclusive economy that is strong and resilient.
You can read our entire interview with Mission Driven Finance in our blog.
Boston Residents Create Well-Paid Sustainable Jobs
CERO is a worker-owned cooperative on a mission to encourage composting and create jobs in the low-income Boston neighborhoods of Roxbury, Dorchester, and East Boston. It’s a small but unusually diverse team: two of the five worker-owners are African-American, two are Latinas, and one is white. Setting the minimum investment in their DPO at just $2,500—open to any resident of Massachusetts—by the end of the year CERO had raised the $100,000 they needed to go into a bank for a loan. In January 2015 they did just that, receiving a $100,000 line of credit from the Cooperative Fund of New England. Listen to our interview with CERO here.
How can an owner sell a growing, highly profitable business to the workers when they can’t pay what the business is worth? With our help, Real Pickles raised $500,000 in just two month through a Direct Public Offering, or DPO, in which it sold non-voting preferred stock to investors in Vermont and Massachusetts. Real Pickles was able to convert to a worker-owned co-op — instead of leaving the business, the former owners became equal co-owners, with more time for life. Read a detailed case study.
Sonoma West Publishers
Small Town Newspaper Uses Their Own Readers to Raise Capital
Rollie Atkinson of Sonoma West Publishers describes the outcome of their 2018 DPO, “we made a big push in the final weeks with advertising in our own newspapers to reach our DPO goal of $400,000. We actually went over the goal and we ended up with just over 200 local community investors. We can now look forward to a year of lots of community and reader outreach, new journalism projects and strengthening of partnerships around our mission of informing, educating and building our local communities.”
Why did you choose to do a direct public offering (DPO) to raise capital for the fund?
The DPO funding model allows for a broad base of local and smaller community investors. Readers and local businesses gain an extra connection and added sense of pride in the local newspaper. The DPO structure is superior to seeking a commercial bank loan or taking on larger minority partners. The structure also allows for continued independence for our editorial voice.
You can read our full interview with Sonoma West here.
In 2018, we worked with TechSoup to launch the first ever Reg A+ nonprofit offering. The raise is also the first offering hosted on the svx.us.com platform. TechSoup was able to reach over 70% of its $11 million goal in the first year. We spoke with Ken Tsunoda, VP of Development, to discuss how they achieved this success and why they felt it was important to offer unaccredited investment opportunities at amounts as low as $50.
In the fertile Pioneer Valley on Western Massachusetts, PVGrows has been operating an investment fund since 2015. PVGrows is a network of agricultural businesses, consumers and stakeholders who care about their network and the flourishing of regional food systems. Read about their experiences in this interview from September 2018.
Cutting Edge Capital is a strategic practice of Cutting Edge Counsel.
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