Following the recent successful TechSoup Regulation A+ offering, SVX.US is now introducing its new cohort of impact capital campaigns, including Medwave Software Solutions and Shared Capital Cooperative, with additional listings soon to follow. This seems a good time to reflect on why this platform is different, and why we partnered with SVX Canada to create a U.S. version.
Years in the Making
Cutting Edge Capital (CEC) has a long history of experience with alternative securities offering marketplaces, both at the national exchange level and for private or exempt public offerings. As GC at the Pacific Stock Exchange, I was an early advocate for alternative market structures, including the creation of Alternative Trading Systems for securities broker-dealers. Since then, CEC has advised some of the earliest alt markets, such as Mission Markets. Along the way, we became familiar with, and a strong supporter of, the SVX trading platform in Canada, which is focused exclusively on Impact. They in turn expressed a desire to work with CEC, due to our leadership role in advising and supporting community capital raises. As Rick says to Louis at the end of the movie Casablanca, it was “the start of a beautiful friendship.”
What we’ve learned is that, while issuers always need to find the right investors and vice versa, this is even more of a challenge for those in the “Impact” space where the focus is less on the highest returns and more on supporting companies who care deeply about environment, social and governance (ESG) issues – and who actually walk that talk. For impact-focused investors who don’t see true ESG/Impact choices in the national markets, it’s not easy to find issuers like TechSoup without already knowing about them. And though there are many more ways issuers and investors can find each other outside of the national markets, (e.g. broker-dealers, crowdfunding platforms, matchmaking platforms for Accredited Investors, or even an issuer’s own website), these other platforms neither curate nor limit their offerings to Impact/ESG. But we know there is a growing body of investors who want to see a company’s ‘return on impact’ to be as important as financial returns on investments (ROI) if not more so.
Why the Focus on Impact and ESG?
SVX.US was never meant to be in competition with these other sites that are agnostic to Impact and that focus on the chance for significant profits (whether that ever happens), or sites that embody a shareholder primacy approach that continues to scorch the earth in their wake. It does not search for the mythical unicorn or, like most all VCs, seek IPO objectives while discarding and shuttering 90% of those that can’t attain it.
Instead SVX.US is all about Impact – where companies with sound financials who have committed to doing things right for people, planet and environment can easily find support from an investor community that understands the importance and need. SVX.US offers a place for all kinds of organizations doing Impact capital offerings, whether for-profit, nonprofit, place-based funds, holding companies, CDFIs or hybrid entities. Whether conducting a Reg D 506(c) private offering with general solicitation, or a qualified direct offering (such as the Reg A+ done by TechSoup), we welcome any issuer that understands these critical issues.
Impact-focused investors have already shown their willingness to invest on SVX.US, and have expressed a strong interest in returning to find more like-minded issuers, such as a technology company like Medwave, which is saving lives by improving healthcare delivery globally, or Shared Capital Cooperative, which finances the formation and expansion of other cooperatives, and in turn helps communities build more just, inclusive and equitable local economies. SVX.US is a “social venture” platform where investors can find issuers focused in areas such as Energy and the Environment, Community Economic Development, Sustainable Food & Agriculture, Health and Wellness, Clean Water, Sanitation and Hygiene, Community Real Estate, Education, and digital technologies in support of those categories. We’ve created an Impact meeting place, for a wide range of offerings, such as a private raise of equity or debt, a qualified direct public offering, community and impact investment funds, cooperative capital, impact loan funds, or nonprofit capital raises.
What Should the Role of a Marketplace Be?
When we partnered with the SVX team, we made a conscious decision to avoid any funding that was not mission aligned, in order to specifically avoid external pressures contrary to its purpose. Up until 20 years ago, the national markets were not-for-profit organizations with no shareholders, only members. Today it should not be a surprise that our major markets have the same shareholder primacy pressures as the companies they list, all of which have little room for Impact oriented companies. Our intent is for this platform to instead mirror the kinds of issuers represented, and to show investors that these curated and listed companies have met stringent Impact tests. We witnessed firsthand the mistakes that were previously made in attempts at building alternative markets with a primary profit objective, and we’ve now created a safer place for Impact, where we can keep issuer costs to a minimum and allow the companies we serve to use their resources where they are most needed. We help issuers manage their raise, from their conversion of potential investors, to communications and tracking. The platform handles impact capital articulation, strategies of offerings to consider, all aspects of comprehensive KYC and investor information collection, deal room prep, document review, digital subscription agreements, and a streamlined transaction process in a secure and compliant way. Finally, we help issuers with the referral services they may need, including marketing and legal support.
For impact focused investors, we offer a curated list of Impact companies, along with the information and support they may seek to understand this space better, even including referrals to investment advisors who are mission aligned. Without ROI pressures, or the heavy burden of paying transaction compensation, SVX.US issuers have more freedom to shine the light on their ESG actions and toward a community of investors who care about the same. A beautiful friendship indeed.