Jump-starting Intrastate Crowdfunding for the Future of Small Business Finance

When the JOBS Act was passed, it sounded like a dream to many business people: laypeople would be able to invest in start-ups and reap the benefits of their rapid growth just like a venture capitalist can. We would jump-start the creation of thousands of companies that would bring jobs and wealth to everyday Americans. That dream, however, has yet to become reality. The so-called “Regulation Crowdfunding” made possible by Title III of the JOBS Act has been slow to catch on. In addition, many of the businesses making offerings on national crowdfunding portals are not flashy startups with high growth potential but small local businesses looking for operating capital.

Why are these small local businesses conducting nationwide searches for investors?

It could be because they aren’t aware of other options. In much of the country, locally focused investment crowdfunding has yet to gain traction. To date, over 35 states have passed intrastate investment crowdfunding laws that enable businesses to conduct local securities offerings (either via online portals or on their own). Of those states, many are still muddling through the administrative rule-making process. In several of the states where these rules have been finalized, there aren’t yet any state-level portals up and running, nor are there lawyers or professional service providers who know how to conduct such an offering.[1]

What’s stopping the growth of intrastate investment crowdfunding?

According to Amy Pearl of Hatch Oregon and Janice Shade of Milk Money in Vermont—two of the organizations (a nonprofit and for-profit, respectively) that are leading the way with investment crowdfunding in their states—the problem is multifaceted. Intrastate investment crowdfunding has not received as much media attention as the JOBS Act and Regulation Crowdfunding, so many of the people who could be using these services don’t even know that they exist. Businesses aren’t aware that such portals can be a viable source of capital and investors don’t know that they can use these laws to support their local economies.

Unlike the JOBS Act, most intrastate investment crowdfunding laws don’t require funding portals to be run by registered broker/dealers or to be licensed by the SEC. In most states, this means that a funding portal could be started by any enterprising entrepreneur or organization. But this also means that intrastate investment crowdfunding portals are start-up enterprises themselves, and thus must also raise seed funding and develop sustainable business models of their own.

Pearl and Shade run two of the most successful intrastate investment crowdfunding portals currently in existence, and Hatch Oregon and Milk Money Vermont serve as models for entrepreneurs looking to launch similar services in other states.

Amy Pearl of Hatch Oregon & Hatch Innovation

In Oregon, Pearl was instrumental in lobbying for the creation of an intrastate investment crowdfunding exemption. She helped write the rules for the Oregon Intrastate Offering Exemption, which created the Oregon Community Public Offering (CPO). Oregon’s law allows businesses to raise up to $250,000 through such offerings over the lifetime of their business. To date, Pearl has facilitated almost $500,000 in local investments over the two years since CPOs were signed into law. Hatch Oregon is part of the same umbrella organization (Hatch Innovation) as Pearl’s successful statewide network of business incubators, Hatch Labs. She has been able to use Hatch Labs as a platform to teach entrepreneurs about these new financing mechanisms.

Pearl’s real challenge has been investor education. Teaching investors how to evaluate these new securities offerings is essential to the success of investment crowdfunding, and the state of Oregon did not have a plan to address this challenge when its intrastate offering exemption went into effect. Hatch Labs connects Pearl to a large pool of local entrepreneurs, but her efforts can only succeed if there are investors willing to invest in the companies she works with.

Louisa Schibli (left) & Janice Shade (right) of Milk Money Vermont

In Vermont, Shade and her partner Louisa Schibli have encountered similar problems in operating Milk Money. Schibli and Shade see themselves as ambassadors for this new model. They, too, have found that they have to spend much of their time on investor education. Shade and Schibli travel throughout Vermont presenting to community groups, teaching people about the ways in which local investing can help individuals, businesses, and communities.

To address these issues and support the development of intrastate investment crowdfunding portals, Pearl, Shade, and Schibli have joined forces with other local investing enthusiasts to create a new organization, the National Coalition for Community Capital (NC3)[2]. NC3 (which was born at Pearl’s 2016 ComCap conference) aims to coordinate investor and business education nationwide, collect data about the new field of intrastate investment crowdfunding, and identify best practices for investors, entrepreneurs, and portals.

To learn more, visit the NC3 website or come to the 2017 ComCap conference September 10-13 in Monterey, CA.  


[1] There are a handful of cases in which locally or regionally oriented portals have sprung up to fill this gap in locales in which state-level laws lag behind. But, with the local framework lacking, they’ve had to conduct offerings under Title III of the JOBS Act.

[2] I am a Fellow with the National Coalition for Community Capital.

Communicating Across Divides

On several occasions in the last year, I’ve found myself in the position of being asked to interpret the south and so-called “middle America” (i.e.: the parts of our country that are located outside of large metropolitan areas) for those living in self-described “liberal bubbles.” First, let me state that I am extremely uncomfortable with this role. I grew up in a liberal bubble in a traditionally conservative state, and (with the notable exception of five years spent in Boston during college) have spent most of my life in such communities. Yes, I was born in the south, but I am the child of two northern transplants which I’ve always felt cheapened my status as a southerner.

I do not feel that I am qualified, in any way, to interpret the experiences of others. That said, I have traveled extensively throughout the Southeast and my own extended family currently includes much of the American political landscape. As such, I’ve chosen to redirect such requests into conversations about how we can communicate across divides (whether those divides be real or perceived). I’m sharing a few of the lessons that I’ve learned, in the hopes that you, in turn, will share your ideas and communication strategies with me.Continue reading →

Status Update

It’s been a few months since I last posted. Here’s what I’ve been up to:

I finished my MBA in Sustainability through Bard College, where I was part of their 4th graduating class.

The Bard MBA Class of 2017
The Bard MBA Class of 2017, with members of our esteemed administration.

I also had the privilege of sharing the Bard MBA’s student leadership award with two amazing women (Jen Shelbo and Reagan Richmond).

I went to DC to connect with some awesome people wanting to expand the power of local investing. Together, we’re starting the new National Coalition for Community Capital.


And I attended the Local Sustainable Economies Conference, presented by SBN Mass, AMIBA, and BALLE, where I co-presented with Michael Shuman and Amy Cortese. I had a great few days in Boston talking about community capital, getting cash into the hands of entrepreneurs, investment crowdfunding, and moving capital to jump-start local economies.

All in all, it’s been a busy and exciting few months! Next up, I’ll be relocating back to North Carolina where I’m excited to dig in to a few new projects. Follow me on Twitter to learn more about my work and future speaking engagements.

Localization vs. Globalization

Is localization inherently anti-globalization?

I recently came across this video from Local Futures, an international NGO advocating for localization, that pits the two against each other:

Going Local: the solution-multiplier from The Economics of Happiness on Vimeo.

I find myself conflicted by this polarized messaging. On the one hand, improving our communities is in everyone’s best interests and should have mass-appeal. The places that we live are our most immediate realities and we should act to protect them.

I’m unconvinced, however, that globalization is the enemy. Our communities are complex places, made up of a multitude of social, environmental, and cultural connections. And globalization’s effects on those three facets of our society are not all together bad.Continue reading →

Providing Access to Capital for Local Businesses

Prior to enrolling in the Bard MBA in Sustainability, I founded and led a shop-local program in Durham, NC and worked with Slow Money NC, a small non-profit organization that leads a peer-to-peer lending network to finance North Carolina’s local food system. These experiences, along with coming of age during a recession, led me to develop an interest in economic democratization. I saw firsthand how difficult it is for people to obtain the necessary capital to start and expand their businesses.

In short, I was witnessing the consequence of one of Thomas Piketty’s primary observations in his book Capital in the Twenty-First Century: economic inequality grows when the rate of return on capital exceeds the rate of growth of the overall economy. This reduces the incentive for the holders of that capital to distribute it and, thus, makes it harder for those without capital to obtain it. Given that our economic system functions thusly, I began to explore how these limits could be circumvented.

One such method is to work outside traditional capital markets entirely, via community financing. While community financing can take several forms, I have chosen to focus on opportunities for equity investments via community-owned businesses.Continue reading →

Community Ownership Project Featured on Independent We Stand

Independent We Stand recently featured the community ownership project that I’m working on with the American Independent Business Alliance

“Community-Owned Businesses Bring Local Residents Together For More Than Profits

It’s the time of year when communities come together – to celebrate the holidays, to bring warmth to neighbors in need and to look ahead to a new year. While important, that community togetherness shouldn’t be just a seasonal thing. Community-owned businesses bring local residents together all year long in a shared approach to supply and demand.

Continue reading →

Talking with Wendy Gordon about Behavior Change for Sustainability

I sat down with Wendy Gordon recently for the Bard MBA’s Sustainable Business Fridays podcast to discuss methods that can empower people to change their behaviors and habits for the better. Wendy runs PIPs Rewards, which stands for “Positive Impact Points,” a gamified app that encourages people to make changes in their daily lives that positively impact themselves and the world around them. Continue reading →