By now, most people are probably familiar with popular crowdfunding sites like Kickstarter and IndieGoGo. However, far fewer people are aware of the newer concept of equity crowdfunding. That is likely to change. Instead of just preordering a product or buying a "perk," people can now actually invest in promising new companies. Invest Local, LLC has become the first site to begin operating under Colorado's Crowdfunding Act.
“Access to capital remains a key challenge to starting and growing businesses, social enterprises and community projects in Colorado,” says Karl Dakin, president of Invest Local, LLC. You can read their full press release below.
Signed into law earlier this year by Governor John Hickenlooper, crowdfunding efforts through which investors can acquire debt or equity interests in a prospective company are now lawful in the State of Colorado. Although businesses may issue debt or equity under the new Act, this method of capital formation is still commonly referred to as "equity crowdfunding."
Just as other sharing economy or peer-to-peer technologies have disrupted entire industries (think Uber and AirBnB), crowdfunding has the power to disrupt traditional financing by making the process available to far more people. Funding for new companies or existing companies looking to expand could increase dramatically. The social aspects of crowdfunding also offer companies the opportunity to spread the word about their products and services. A high quality video has been shown to be the most effective way to communicate and share such a brand message.
The following companies have filed Form CF-3 to act as an on-line intermediary under the Colorado Crowdfunding Act:
- Colorado Equity Crowdfunding coloradoequitycrowdfunding.com
- EquityEats, Inc. www.equityeats.com
- EzyXchange Ltd. www.ezyxchange.info
- MassVenture CO, Inc. www.massventure.co
- Invest Local, LLC. investlocalcolorado.com
View the Press Release from Invest Local, LLC here:
Invest Local LLC
Invest Local LLC Opens First Investment Crowdfunding Platform in Colorado
Non-accredited investment crowdfunding arrives in Colorado as Invest Local LLC offers crowdfunding platform services.
DENVER, CO—December 1, 2015—Access to capital remains a key challenge to starting and growing businesses, social enterprises and community projects in Colorado. Without capital there is less innovation, fewer new products and services and fewer jobs – all important factors in strong, sustained economic growth.
A new company, Invest Local LLC, is the first to offer crowdfunding platform services in Colorado that are targeted to investors that make up the 97% of the population who are non-accredited investors.
The company is acting as a value added reseller of services from FundPaas (http://www.fundpaas.com) - a California business. “We searched out a crowdfunding platform that is adaptable to different types of crowdfunding, compliant with federal and state laws and regulations and which can keep the costs of crowdfunding affordable to the small business. FundPaas met all of these criteria. We look forward to working together with FundPaas in supporting thousands of Colorado businesses, social enterprises and community projects in raising the money they need,” stated Karl Dakin, President of Invest Local LLC.
Under the new Colorado Crowdfunding Act, organizations raising money are required to use a registered intermediary such as Invest Local LLC to manage the large number of investors who invest in small dollar amounts.
Investment crowdfunding is a revolution within the capital industry as new laws and regulations at the federal and state level have removed restrictions on how money can be raised and on who can invest. Investment crowdfunding fills the large gap in the capital industry for those organizations that cannot qualify for bank financing or meet the high performance requirements of angel investors. These organizations are no longer limited to financial institutions and wealthy individuals, but can seek money from friends, family, associates, customers, employees and other members of their community.
“The potential of investment crowdfunding in providing capital needed by Colorado small businesses is tremendous. There are an estimated 4.3 million non-accredited individuals and over 700,000 businesses that may now invest through crowdfunding. If each of these individuals and businesses were to invest only $1, they could fund five businesses up to the $1 million limit (unaudited financials) under the Colorado Crowdfunding Act. That’s $5 million new dollars invested in Colorado. If each of these same investors invest $100 each year - $1 each in 100 different Colorado businesses, that’s half a billion new dollars invested in Colorado – each year. The positive impact upon Colorado’s economy is immeasurable”, said Karl Dakin.
Invest Local LLC will soon begin listing crowdfunding opportunities on its website - http://www.investlocalcolorado.com. Invest Local LLC will also begin supporting Colorado businesses who are directly raising capital through Limited Registration offerings. Securities laws prohibit Invest Local from promoting individual crowdfunding campaigns, however Invest Local LLC will be active in general efforts to encourage citizens of Colorado to ‘Invest in Colorado’. Organizations interested in raising capital through investment crowdfunding may complete a free survey on the website.
Initially, the company will support intrastate crowdfunding campaigns under Colorado’s Limited Offering statute and the new Colorado Crowdfunding Act. It will soon support federal 506c and Reg A+ crowdfunding campaigns. And, it expects to support the JOBS Act, also called Series III, crowdfunding campaigns when they are authorized in 2016. The platform can also support large scale product crowdfunding campaigns and charitable fundraisers.
Invest Local LLC will act as a reseller of educational programs developed by the Colorado Capital Congress PBC (http://www.coloradocapitalcongress.com), a social enterprise working to improve the capital ecosystem in Colorado. Programs include how to run a crowdfunding campaign and how to invest through crowdfunding. The next program on raising capital – Customer Crowdfunding – will be presented on December 10th at Colorado Lending Source. The next program on investing through crowdfunding – Main Street Investing – will be presented on December 17th. A limited number of free passes to each workshop are available to community leaders.
Invest Local LLC is developing programs to help economic development agencies, community organizations and professional associations in promoting investment in Colorado businesses. These programs will focus on the advantages of investing in ‘Main Street’ Colorado over Wall Street.