Don't Miss SuperCrowd: April 17-18

V.3, N.6

Each year, the whole local investment family gets together, and like Thanksgiving dinner, you don’t want to miss it. That’s why we interviewed Devin Thorpe for this issue, the organizer of the SuperCrowd24 Conference, which takes place virtually in two weeks. Devin has one of the biggest, most informed viewpoints on the community capital movement, and I hope you enjoy our conversation.

And you’ll also find our latest listings of local investments below. If you think others might find this information useful, please forward this issue to your network.

~ Michael Shuman, Publisher

Devin Thorpe is the Leonard Bernstein of the crowdfunding movement who orchestrates every dimension of it. Based in California, Thorpe has pumped out webinars, blogs, study groups, books, and conferences on the subject. Coming up on April 17-18, he will host his virtual SuperCrowd24 conference with an amazing roster of experts on local investment topics. We asked Devin about his work and his vision for the movement’s future.

MS: In the early part of your career, you created an investment bank. How did that experience lead to your interest in community capital?

DT: My first client was a startup seeking to build the first investment crowdfunding platform. The regulatory environment wasn’t conducive, even though the technology was, so the client didn’t get off the ground. That experience planted the seed of my interest in democratizing capital markets. Throughout my time running the firm, I also volunteered with local nonprofit organizations supporting entrepreneurs. That fostered my passion for building community.

MS: You now operate a public benefit corporation called The Super Crowd, Inc. What is its mission? And what kind of activities is it engaged in?

DT: SuperCrowd exists to support social entrepreneurs, diverse founders, and community builders by expanding impact crowdfunding. We help entrepreneurs raise capital from the crowd by providing education and encouraging ordinary investors to add impact crowdfunding to their portfolios. In fact, to launch our company, we also raised capital from the crowd.

MS: You recently held an in-person conference in Baltimore called SuperCrowdBaltimore. How did it go?

DT: Great! Building on the inspiring work of the folks at Crowd Fund Baltimore (Crowdfund Main Street) and Community Wealth Builders, SuperCrowdBaltimore demonstrated the power of crowdfunding to support community development. We brought together a variety of community leaders and regulated investment crowdfunding experts to discuss the intersection. We could see tremendous opportunities for collaboration across disciplines.

MS: Since the conference happened, Baltimore has been thrown into a huge crisis when a cargo ship collided and collapsed one of the key bridges for traffic to move up and down the eastern seaboard. Is there a role for crowdfunding to help alleviate the impact?

DT: Yes! New revenue opportunities will come from the huge construction project ahead, starting with demolition. Some small businesses will need additional capital to meet those opportunities. Regulated investment crowdfunding provides a mechanism for that. A rising tide won’t necessarily lift all the boats; for some, a small capital raise is all that is needed to prevent them from getting stuck in the mud and missing out.

MS: Very soon–on April 17 and 18–you’ll hold a virtual conference called SuperCrowd24. The speakers read like a “who’s who” of the local investment movement. What is the conference aiming to accomplish?

DT: We’re grateful to you and the nearly 100 other presenters at SuperCrowd24 who will share their knowledge and experience. By bringing together this extraordinary collection of experts and providing meaningful opportunities to network, we’re helping social entrepreneurs, diverse founders, and community builders learn from one another and make valuable connections. We’ll even have ten companies pitch live! Everyone who attends the event will leave better equipped to raise capital from the crowd and invest for impact.

MS: Will sessions be recorded so people can catch up later with any sessions they missed?

DT: We will do our best to record every minute of SuperCrowd24. Over two days, we will produce dozens of hours of content available to everyone who registers for the event.

MS: I understand you are doing another in-person conference in Chicago in June. If MSJ readers want to help organize a conference in their own communities, what do they need to do to make it happen?

DT: We’re excited for SuperCrowdChicago on June 12. It will give us an opportunity to build on the lessons from SuperCrowdUtah and SuperCrowdBaltimore. We’d love to explore partnering with folks to do more local events. Just reach out!

MS: You also do regular virtual pitch sessions that you put on television. What are these all about?

DT: Last year, we added streaming television via the e360tv network (like Netflix, but free) to the Superpowers for Good show. This show dramatically increased our audience size, bringing in people who typically watch the entire episode. We also just launched our quarterly live pitch. We have a diverse set of judges who select the companies to pitch. After each company pitches, the judges ask probing questions and then we give the television audience a chance to ask questions. Finally, the judges pick their favorite. Our company agrees to invest a small amount in their pick. The audience also chooses the SuperCrowd Choice award recipient. Throughout the live pitch, we encourage the audience to invest in these companies.

MS: Your work is amazingly prolific. MSJ readers should know that you’ll soon have a book out called How to Make Money with Impact Crowdfunding. (It’s available for pre-order here on The Local Crowd.) Tell us some encouraging stories about people who have made money with crowdfunding.

DT: The easiest way to make money with impact crowdfunding is to invest in local businesses raising capital using debt structures. These companies typically start making payments within 90 days and deliver returns that match or exceed what individual investors typically earn in the stock market. Everyone can, with practice and discipline, learn to make money supporting community-focused small businesses. The vast majority of these businesses are making their loan payments on schedule, delivering returns to their investors. Returns are much more predictable than the stock market.

MS: My own experience is that if you lend money to people with this kind of structure—perhaps to help them pay off expensive credit card debt—that can also generate success. There’s a lot of room for a lucrative interest rate that’s lower than 25%! Do you also look at crowdfunding for people like this?

DT: Great point! The interest rates I’m seeing range from 3 to 13 percent in the crowdfunding market. At the high end of that range, it can feel almost like you are taking advantage of an entrepreneur. But, it is important to remember that the alternatives available could be 16 percent merchant processor loans, 25 percent credit card loans, or 36 percent factoring lines. Even at 13 percent, you could save a small business owner a lot of dough!

MS: What are the two or three most significant developments you’ve seen in the community capital universe over the past year or so?

DT: First, we saw a huge decline in venture capital investing in 2023 and virtually no decline in investment crowdfunding. That suggests we’ve found a stable source of capital for community businesses.

MS: From my standpoint, that’s great news. I believe that VC is highly overrated and usually hostile to community business. Go on.

DT: The second thing I’d note isn’t positive. The “war on woke” includes attacks on diversity, equity, and inclusion, and ESG investing. We need to be deliberate about supporting diverse founders. Crowdfunding works well for them because, like anyone else, they start with their own community. In the long run, we need to help diverse founders attract capital from the wider community.

MS: There are other ominous developments on the horizon as well. For example, I’m worried that lots of investors who have made investments via SAFE notes–which they never really understood–may be unpleasantly surprised when they earn little or nothing in return. (SAFE notes give holders an opportunity to buy stock at some future moment.) What else keeps you up at night about things that could go wrong?

DT: That’s a great point. SAFEs issued by companies that are unlikely to raise future equity are scary.

The parallel issue is the valuations I see on some offerings. It is tempting for startup entrepreneurs to use Silicon Valley comparisons for their valuations, but if the entrepreneur isn’t part of that ecosystem, sadly, the comparison doesn’t hold up. Subtle but real dynamics in that clubby community prop up valuations. Outside that world, valuations are much lower. Investors need to scrutinize them carefully.

MS: If we’re honest, the percentage of Americans involved in investment crowdfunding is still well under 1%. What do you think needs to be done to increase that percentage to, say, 5%?

DT: You hinted at the issue earlier. Too often, when we talk about community investing, we talk about the community benefits and the social impact. That is what motivates you and me. That said, the vast majority of people want to be sure they can make money with their investments. Intentional efforts to pair profit and impact will attract people who are reluctant or unable to sacrifice returns for impact.

MS: Do you invest locally yourself? If so, how?

DT: In recent years, Gail (my spouse of 35 years) and I have made dozens of impact investments via crowdfunding. Most of our investments align with the investment choices of our little angel investor club, the Impact Cherub Club. Each month, we screen a variety of deals and pick one or two to invest in. We look to support social enterprises, diverse founders, and community businesses.

MS: I’ve been a guest on your Superpowers for Good show, as have many other leaders in the community capital space. What is your goal for the show?

DT: Over the past 11 years, I’ve hosted close to 1,500 episodes of my show with changemakers of all varieties. Over the past 24 months, I’ve been narrowing my focus on impact crowdfunding. We often feature small business leaders who are raising capital via regulated investment crowdfunding. We’re working to help our audience learn how to invest effectively for impact and financial returns and expose them to opportunities to do so.

MS: One thing I appreciate about you, Devin—and identify with—is your unwavering optimism. What accounts for that? And how can we spread it?

DT: Having asked over 500 entrepreneurs, including Bill Gates, about their superpowers, I see that successful impact comes from three factors: compassion, tenacity, and optimism. At a deeply personal level, I work on all of these values. One key that Gates taught me is to apply a fourth skill: patience. We need to give ourselves and others time and space. With these four skills: compassion, tenacity, optimism, and patience, there is nothing we can’t do!