Crowdfunding: Investment-Based

Crowd-funding allows a broad range of supporters - regular people, not just wealthy "accredited" investors - to invest directly in a business by providing a loan or an equity investment.

  • Useful for a business that intends to pay a financial return, but not as much or as fast as typical venture capital funds seek
  • Can build intimate loyal customers - the investors
  • Allow regular people to invest in local businesses
  • Great way for community members to invest in and be connected to/committed to their business
  • Are a good option for businesses that have audiences with a passion for their community or field - local boosters or foodies, for example
  • Open a wider net than donations because business can bring in people they don't necessarily know who care about the business' mission and are looking for a return

Two kinds of crowd-funding:

Direct Public Offering (DPO)

Similar to donation-based crowd-funding, businesses announce an opportunity to invest in them, usually through a public campaign, with a website, social media outreach, and videos. 

Private Placements

The business offers the investment privately, to people that know the business.

  • Good option if the business owner thinks that they can raise enough money by asking their network of close friends, family, and community members directly
  • Has a less onerous and less expensive legal process than DPOs
  • In California, businesses can have up to 35 investors that don't meet any wealth or income requirements

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Cutting Edge Capital
CuttingEdgeCapital.com
510-834-3450
344 20th Street, Oakland [map]

Serves the United States

  • Investment crowd funding and Direct Public Offering consulting

Loan sizes
$250,000+

Requirements and How It Works

  • Consulting and legal advice for community capital raises and investment crowdfunding
  • Publicize and advertise both wealthy and non wealthy investors
  • Equity or debt offerings

Features

  • This source will lend to or invest in startups with less than one full year of operations.
  • This source provides finances for nonprofits.
  • This source determines creditworthiness with alternative criteria, not just credit scores.

Good Certifications
B Corp, Bay Area Green Business, Oakland Grown member

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Cutting Edge X
CuttingEdgeX.com
510-834-3450
344 20th Street, Oakland [map]

Serves the United States

  • Listing platform for community capital offerings in the U.S.

Loan sizes
$250,000 - $10,000,000

Requirements and How It Works

  • List your community capital offering, such as direct public offerings and Regulation A offerings
  • Free to Cutting Edge Capital clients

Features

  • This source will lend to or invest in startups with less than one full year of operations.
  • This source provides finances for nonprofits.
  • This source determines creditworthiness with alternative criteria, not just credit scores.

Good Certifications
B Corp, Bay Area Green Business, Oakland Grown member

OG Member Round Decal.jpg
 

Jenny Kassan Consulting
JennyKassan.com
510-529-1860

Serves the United States

How it works and requirements: 

  • Legal support and coaching on private offerings and investment crowdfunding
  • Both wealthy and non-wealthy investors
  • Equity and debt offerings

Features:

  • This source will support startups with less than one full year of operations
  • This source supports financing of nonprofits
  • This source does not consider credit scores when determining readiness for financing

Good certifications:
B Corp, 1% for the Planet


Wefunder
Wefunder.com 

Serves the United States and beyond 

  • For-profits 

Loan sizes
$50,000 - $50,000,000 

Requirements and How It Works 

  • $195 fee 
  • Up to a 7% fee, only if funding is successful 

Features 

  • This source will lend to or invest in startups with less than one full year of operations 
  • Generates and files a Form C 
  • Provides free crowdfunding contracts 

Good Certifications
Public Benefit Corporation, Donates 5% of Profits to Nonprofits 


Crowdfunding: Reward/Donation-Based

These platforms allow businesses to solicit donations from the public using online tools. 

  • Are donations, not loans - no repayment required
  • Usually the business gives away rewards to their supporters, like products, naming rights, and vouchers for experiences
  • Good for businesses who...

- Can tell a compelling story about their business or product using social media, photos, and/or video
- Have large networks of friends, family, and fans who really want to help the business achieve its goal and aren't concerned with getting paid back


Barnraiser
Barnraiser.us

Serves the United States

  • Food innovators
  • Sustainable food and farming
  • Food production
  • Community-based food, garden, and nutrition projects
  • Food education and media

Funding sizes
$2000 - $30,000

Requirements and How It Works

Crowdfunding campaigns are launched with a pre-set goal, and contributors pledge support online:

  • Must reach campaign goal to be funded
  • 5% fee to Barnraiser, plus 4-5% for payment processing

Features

  • A crowdfunding platform that connects communities across the nation through donation-based funding from individuals, organizations, and businesses alike.

Credibles
Credibles.co

Serves the United States

  • Food businesses (like co-ops, restaurants, coffee shops, farmers, butchers)

Loan sizes
$5000 - $150,000

Requirements and How It Works

  • Businesses receive cash upfront through the sale of "edible credits" and gift cards
  • Customers receive a tab with credits (often extra bonus for larger prepayments) to be redeemed for future purchases

Features

  • This source offers 0% interest loans.
  • This source will lend to or invest in startups with less than one full year of operations.
  • This source determines creditworthiness with alternative criteria, not just credit scores.

IndieGoGo
IndieGoGo.com

Serves the United States and beyond

  • Businesses interested in sourcing funds from their customers or community

Loan sizes
$3700 average

Requirements and How It Works

Crowdfunding campaigns are launched with a pre-set goal, and contributors pledge support online:

  • Fixed funding - get your money only if goal is reached; 4% fee
  • Flexible funding - get whatever money you raise, even if goal isn't met; 9% fee
  • Payment platform fees are an additional 3%

Features

  • This source will lend to or invest in startups with less than one full year of operations.

Kickstarter
Kickstarter.com

Serves the United States and beyond

  • Businesses interested in sourcing funds from their customers or community

Loan sizes
$5000 average; $100,000 - $1,000,000+ is possible

Requirements and How It Works

Crowdfunding campaigns are launched with a pre-set goal, and contributors pledge support online:

  • Projects must reach their goal to be funded
  • Projects typically provide rewards to backers

Features

  • This source will lend to or invest in startups with less than one full year of operations.

Good Certifications
B Corp


Start Some Good
StartSomeGood.com

Serves the United States and beyond

  • For-profits, nonprofits, community groups, and individuals
  • Social impact projects and organizations
  • Advocacy/activism
  • Community organizing
  • Research/information/inspiration

Loan sizes
Goal set by campaign

Requirements and How It Works

  • Must create positive social change
  • Must be new initiative or new element to the work
  • 5% fee plus about 3% for payment processing

Features

  • This source will lend to or invest in startups with less than one full year of operations.
  • This source provides finances for nonprofits.
  • This source provides finances for nonprofits.