The Argument for Revenue-Share Crowdfunding
V.2, N.35
In the crowdfunding universe, no investment is more risky than a SAFE (Simple Agreement for Future Equity) note. Honestly, they should be called unSAFE notes. They give early investors “the opportunity” to buy shares when the company issues stock, a glittery carrot for starry-eyed investors. However, the catch is that there is no specified nor guaranteed time when the conversion will happen — and even if it does, investors may have put more money into the company than will ever come back via stock value. Sure, SAFE note holders can get repaid if the company dissolves, except by then, there are probably no assets left to distribute.
Venture capitalists may chirp about SAFE notes. Yet, it is often local investors who end up eating crow. I’ve talked with many entrepreneurs over the years issuing SAFE notes and many investors buying them. Almost none were able to explain the concept or the terms. Sadly, thousands of SAFE investors may soon find their notes aren’t worth a song.
Justin Renfro at WeFunder, one of the leading crowdfunding platforms, also has some thoughts about the SAFE note early investing model. In our lead story, a post from Justin’s blog outlines what he learned from talking to 100 venture capitalists with an eye for early investing. His conclusion: Revenue-sharing (sometimes framed as profit sharing) is more likely to make early grassroots investors significant returns. WeFunder has already put five companies using the revenue-share model on their site. Other portals, such as Mainvest, also use revenue-sharing, and we hope more will.
Our latest issue also includes Crowdfund Capital Advisors’ helpful analysis of crowdfunding by age, showing that the most engaged cohort is 30-39 years old. A piece by Kingscrowd explores the growing use by crowdfunding portals of “testing the waters” offerings, where a company can get soft commitments from investors before making a formal offering (which in turn allows a company to see if it’s viable for crowdfunding before spending a chunk of change on legal documents). Elias Crim writes about women from the Caribbean organizing grassroots banking services for their diaspora communities in Toronto. Also, you’ll find interesting stories about how community land trusts are rescuing communities in Hawaii and Florida from recent climate disasters and how a grocery cooperative in Finland has grown to 2.5 million members (nearly half the country’s population!).
Finally, a warm thanks to the nearly 1,000 of you who took our snap poll last issue. We will release the results—and our plans—in the next issue.
NEWS
The Case for Revenue-Share Crowdfunding, Justin Renfro (October)
Crowdfunding's Age Dynamic, Crowdfund Capital Advisors (November 2)
Deep Dive into Testing the Waters Data Since 2020, KingsCrowd (October 23)
Banker Ladies, Solidarity Hall (October 24)
Land Trusts in Communities Hit By Natural Disasters, Yes! Magazine (October 19)
The Finnish Cooperative That Could, The American Prospect (October 11)
PARTNER VOICES
How Three Cities Are Building Equitable Local Economies Through Employee Ownership, Project Equity (October 23)
Investing in Enterprises That Work for Everyone, Stanford Social Innovation Review - Featuring Project Equity (October 23)
NEW INVESTMENT OPPORTUNITIES
Below is our list of recently posted investment opportunities across the United States. Please note that our listing of these opportunities is not an endorsement, and remember that all investments are risky, so click on the hyperlinks and read all the details carefully before investing.
NOTABLE NEW RESOURCES
Building Community Wealth in Scotland: Consultation Analysis, Scottish Government (October 26)
Green New Deal Justice—from Below, Strike! (October 21)
People Powered Growth Report, Employee Ownership Association (October 18)
A Playbook for Creating Quality Jobs Through Employee Ownership, Project Equity (October 17)
EVENTS
FOOD FUNDED 2023 Regenerate - In-Person Event. November 13. Food entrepreneurs and investors convene for educational workshops and live investment presentations to catalyze funding for food ventures. Register here.
SuperCrowdHour: Raise Capital on Your Own Terms - Virtual Event. November 15, at 1 pm ET. Explore innovative ways to fund your business while staying true to your values with attorney Jenny Kassan. Register here.
Expanding the Frontiers of Commoning - Virtual Event. November 16, at 2 pm ET. Schumacher Center convenes a monthly series featuring New Economic thinkers, builders, and activists in various fields. Register here.
bETA Accelerator Info Session - Virtual Event. November 28, at 6:30 pm ET. bETA is New Majority Capital Foundation's 10-week hybrid accelerator for under-represented individuals who want to learn how to acquire and scale an existing company. Register here.
Exploring Legal Perspectives in Racial Equity Lens Investing - Virtual Event. November 29, at 2 pm ET. Briefing about the evolving legal landscape for racial equity lens investing. Register here.
SuperCrowdBaltimore - In-Person Event. November 30. Learn to invest like a pro and raise money for your small business or social enterprise. Register here.
Launching Businesses with Crowdfunding - Virtual Event. December 5, at 2 pm ET. Explore both the financial and non-financial benefits of crowdfunding for startup entrepreneurs. Register here.
Neighborhood Economics - In-Person Event. February 26-28, 2024. Event facilitating ongoing conversations across geographies that help people build economic architecture so everyone will thrive. Register here.
ICYMI
It’s Time to Make Way for the Banker Ladies, University of Toronto Scarborough
Introducing Employee Ownership: Empowering Agency Staff And Shaping The Future, Forbes
Shared Capital Investment Campaign, Shared Capital Cooperative
Solving Succession Woes with Employee Ownership Trusts, Employee Ownership Australia
Exiting Shareholder Supremacy, Schumacher Center for a New Economics
JOBS BOARD
The Democracy Collaborative is hiring two Community Wealth Building Fellows
Common Future is hiring for a Controller
Mission Driven Finance is hiring a Senior Investment Analyst, an Investment Management Vice President, and a Structured Finance Director
Project Equity is hiring a Policy & Impact Manager
Raise Green is hiring a Sales Development Representative and a Climate Finance Project Manager
FREE SHORT VIDEOS ON LOCAL INVESTMENT
If you want short answers to your most pressing questions about local investment, we have prepared a series of 5-10-minute videos. Find them posted on our website under the “Local Investing Videos” page. Or click on the links below to be directed to videos based on the topic:
BECOME A MAIN STREET CHAMPION
Have you always wanted to start a local investment club? A website of local investment offerings in your community? A local investment study group? Whatever your interest or ambition, we invite you to “go public” to help others in your region find you, scheme with you, and start a local investment movement in your community. We aim to identify dozens, then hundreds, then thousands of Main Street Champions like you across America. We already have Main Street Champions across the US, from San Luis Obispo, CA, to Providence, RI, and even Australia! Together, we can move our hard-earned savings from Wall Street into our communities. Fill out the intake survey below to join this growing cohort!
CHAMPIONS BY STATE
AZ | CA | CO | DC | FL | GA | HI | IA | IL | IN | KY | LA | MD | MN | MI | MT | NC | NH | NE | NY | OH | OK | OR | PA | RI | SD | TX | VA | VT | WA | Australia | Belgium | Canada | India
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About The Main Street Journal
The Main Street Journal aims to catalyze the movement of $50 trillion from Wall Street to Main Street to facilitate economic development and economic justice. It’s sponsored by the National Coalition for Community Capital, with a grant from the Heron Foundation. We welcome feedback about everything, from our design to content. Also, we welcome suggestions of other groups to involve as partners and additional information to include. Please send ideas to Jen Risley at jen@main-street-journal.com.
PARTNERS
Abrams+Angell | American Independent Business Alliance | Candide Group | Community-Vision Solutions, Benefit LLC | Council Fire | Crowdfund Better | Cutting Edge Capital | Democracy Collaborative | Exit to Community Collective | Fair Food Network | Impact Finance Center | ImpactPHL | Initiative for Local Capital | The Kassan Group | Mission Driven Finance | National Coalition for Community Capital | Natural Investments | Neighborhood Associates | Neighborhood Economics | New Majority Capital |. Next Egg | Nonprofit Quarterly | Ownership America | Ownership Matters | Project Equity | Project for Public Spaces | Prospera Partners | Raise Green | Revalue | Schumacher Center for a New Economics | Shelterforce | Slow Money | SOCAP | Sun Valley Institute for Resilience | The Super Crowd Inc. | Transform Finance | Uwharrie Bank | Village Well | Zebras Unite
We welcome any nonprofit or for-profit committed to local investment as a partner. If your organization is interested, please contact Jen Risley at jen@main-street-journal.com.