Investment crowdfunding is here and it’s awesome. This is the crowdfunding exemption that comes out of the 2012 Jobs Act signed by President Obama that now allows small, private, local businesses like ours bring capital into our business through investors of all kinds. It used to be that only rich people (folks with a net worth of $1M or more) could make these kinds of investments. Now, anybody can!
This is such an amazing opportunity for Spotlight: Girls. Venture capitalists and “Shark Tank”-like angel investors have no interest in businesses like ours - slow growth, non-tech, local businesses. And most small businesses find it close to impossible to get bank loans. But, none of that matters as much now because we have you. Spotlight: Girls is now raising money on the WeFunder platform which means that we can reach out to you, our community of regular folks who know and care about our work and mission. You know that there is more to life than the latest app. And you want to be part of growing a successful business that actually does some good in the world.The only problem is that many of us “regular folks” don’t know too much about investing (which gets me so angry that we weren’t taught it in school but that’s a whole other blog post all together). And since regulation crowdfunding just kicked in this past May, many of you might be interested in investing in businesses like mine but have no idea how.
"Can you tell me more about what it would mean to invest? I've never invested in anything before, to tell you the truth. Perhaps you can shed some light on the process and why it's a good financial thing to do (other than supporting your org, which i KNOW is fabulous!). Or point me to some resources? Cuz I sure would love to."
After reading this, I decided that, instead of just writing her back directly, I would create this blog post. I want to clear up some questions you might have so that you can jump into the investment game with your eyes wide open.
Here is a list of the questions I have been asked, frequently, as of late. I hope these answers help you get to the heart of what regulation crowdfunding means for you as a potential investor.
Okay, so what does it mean to invest in Spotlight: Girls?
Excuse me while I get really literal. It totally helps me to go back to the dictionary. Here are 2 definitions of “invest” that are super helpful for me:
expend money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property, or by using it to develop a commercial venture
devote (one's time, effort, or energy) to a particular undertaking with the expectation of a worthwhile result
I promise you I will get to the “material result” part but I want to look at the second definition first. We are first and foremost looking for investors who - like my friend Jean - care about our mission, value our work, and believe that we are the leaders who can actually make it happen. If you are someone looking for a investment that is going to make you rich, fast, I recommend you move on to other options. However, if you are someone who wants to devote your energy (in other words, money) towards the creation of compassionate spaces where girls learn to love themselves, each other, and lead their communities in peaceful and powerful ways, then please, come onboard.
Sounds good. But let’s get back to that “material result” part. I am all about contributing to my community but it would be great to make some money. Can I make money with Spotlight: Girls?
The short answer is yes. That is the whole point. We want you to invest money in us so that we can do the things we need to do to make more money so that that money can go back out to you. That’s investing in a nutshell.
Investing in a business happens in one of two ways. You can lend the company money (debt) or you can buy a portion of the business (equity). Both options are designed to make you money. When you lend money, you are doing so with the expectation that the business pays you back with interest. When you buy equity in a business, you are putting in money upfront so that, when the business grows, you get paid out in some way. For the details on our offer, go to our WeFunder page.
Are you a 501(c) 3, non-profit organization?
No. We are not. We are a benefit corporation registered in the state of California.
So, am I making a donation?
No. When you invest in this campaign, you are investing in a for-profit business. You are not making a donation to a charitable organization.
I also don’t want to lose any money. What about that?
Making any kind of investment in any kind of business is a risk. Although entrepreneurs are some of the most optimistic folks on the planet, we never really know what is going to happen to our business in the future. And, as we know any and everything happens to small businesses. So, yes, there is a chance that you will lose your money. This is why it is highly recommended that you carefully consider how much money you are willing and able to lose before making any investment.
What if I don’t have that money to invest?
You probably have more money than you think you do, money that you are already investing! More than half of Americans have money invested in the stock market. So, it’s likely that if you are reading this, you have some money saved in a 401k or an IRA or some other long-term savings account that allows to grow your money by investing in large, publically-traded companies through the New York Stock Exchange. Well, did you know that you can use some of that money to invest directly in businesses like ours with no penalty? You may consider rolling some money over into a Self-Directed IRA. This allows you to make investments on your own terms. Here’s a great article on what this means and how to do it.
What if I just want to make a donation?
I love that you want to support our work! However, as a for-profit business, we don’t have a mechanism to take donations. We sell things and you buy them. If you are not sure you want to make an investment but you do want to support what we are doing, please buy some stuff.
Okay, you have convinced me to seriously consider this. What should I do next?
The first thing you want to do is visit our WeFunder page. Check out what we are up to and the terms of our offer. And while you are there, check out all the other amazing small businesses that are raising money through crowdfunding. I bet you will find something that really speaks to you and gets you excited about your new found identity as investor.
I invite you to join me on Wednesday August 10 and 12noon PST for a free webinar where I will get down to the nitty gritty and answer any and all questions you have about this investment opportunity. I will even share what I know about investing in small, local businesses generally. I will be joined by attorney and consultant Jenny Kassan who was instrumental in the creation of the 2012 Jobs Act that made investment crowdfunding possible for small businesses like ours.