Women in community investment groupCreating and growing a small business funding source may be a lot closer than you think.  The time has come for women who know small business to step up and take on the Community Public Offering initiative.

For decades we’ve said that we don’t have access to enough capital to make our businesses succeed.  Well, that can change.  It may not be easy, but it is indeed possible.

We all know what Wall Street investment is like.  Simply put your money into a stock or fund and sit back.  Hopefully you will make some money.

And we know what angel investment is like.  Find yourself a rich individual who can literally become your business angel.  This angel must have a hefty minimum net worth, and be a savvy investor.

An initial public offering (“IPO”) can be horrendously expensive and take years to complete.  This is not an option for small businesses at all.

Few of us have direct experience with venture capital, but it is a whole huge ball game unto itself, reserved for the Big Boys.  Massive funds are sitting there for those who need millions and can prove that they have the Next Blockbuster Idea.

Most of those options just don’t apply to any of us.  Period.

Now there is something new.  It is the Community Public Offering.  There is a loophole in SEC rules that says that a local company (i.e., one in your state) can raise limited funding ($250,000 maximum) from local (your state) private parties, each who may invest up to $2,500 in that company.  These investors need not even be sophisticated investors; they can literally be your neighbors, or strangers from across the state.

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Let’s say that Boise Cottons for Kids needs $150,000 to buy product for its new retail outlet.  Previously it might have considered a bank loan, or a loan from Aunt Sally, but truly the options weren’t great.  Now Boise Cottons for Kids can create a prospectus and promote that offering to people in Idaho, and any interested Idaho resident might invest up to $2,500;  these people would buy stock in Boise Cottons for Kids.  Boise Cottons for Kids would not have to pay back the money because it is an INVESTMENT, not a loan.  And the investors would receive shares of stock, and hopefully watch that stock grow over time.  There is also an option under Community Public Offerings for loans instead of stock offerings.

There are a few really big caveats to this style of Community Investment

(1)  Right now only 30 states have such funds established.

(2)  Right now the established funds really aren’t operating all that well; they just aren’t funding many businesses.

(3)  Hardly anybody knows this option exists at all, let alone what the restrictions are.

This is Why YOU Are Needed In Community Investment

I raise this as an option for you to create a Community Public Offering program, NOT as a source of funding for your business, because these programs are just not far enough along to be really successful yet.  They need YOU.  Your ideas.  Your energy.  Your dedication.

How would you feel traveling throughout your state, organizing investor fairs, presenting investment options to your citizens, and offering a new source of funding to your state’s businesses?  Can you imagine the tremendous impact that might have on your state’s economy?

The idea is really great.  Keep your money local.  Keep an eye on your investments by taking a walk down the street.  Help your local economy grow.

This is an opportunity just sitting there, waiting for experienced businesswomen to make it real.  If you’ve got business consulting experience, this may just be the business that you are looking for.

Here Are A Few Things You Should Know About Community Public Offerings

This is a state controlled program, not a federal one.  You will need approval from your state, most likely from the Department of Corporations in your state.

These community investment programs can be run as FOR PROFIT or as NON-PROFIT.  There is one in Oregon that is run as a non-profit.  Although it has been touted as one of the best in the country, even this one isn’t doing much.  You can take a look at HatchOregon.com here.  Look at the bottom of the page on HatchOregon for links to some great information.  I would suggest too that, even if the program is run as a non-profit, there should be room in the budget for a professional lead administrator.

There is no clear guidance on what it means to “promote only within your state”.  Obviously the website for HatchOregon is available to anyone, so technically it is being promoted around the world.  I suspect that an Oregon address may be required of any investor.

Right now none of the programs seems to be doing much due diligence, even to the point of a background check on the principals.  That needs to change.

Right now investor fairs for the companies and potential investors seem to be lacking.  That needs to change.  These people need to be able to come face to face.

Right now these community investment programs do not seem to cooperate with banks and other financial institutions.  That needs to change.

Right now promotional efforts in finding investors is woefully lacking.  That needs to change.

Right now these community public offering programs seem to focus on truly tiny businesses, ones that need only $20,000 to $50,000.  That needs to change.  Women’s businesses everywhere are strong enough to command $200,000 to $250,000.

Women Invest In Women

Study after study shows that women investors prefer investing in women owned businesses.  Creating a strong community investment program, one specifically geared to women owned companies, could be the catalyst that we need to really make our mark over the next decade.

The door is open for strong, creative administrators.  Go.  Make a difference in your community.