Vermont intrastate crowdfunding portal Milk Money,


Intrastate Crowdfunding Portal Plugs a Gap for Early Stage Capital in Vermont

Amy Cortese | February 1, 2017


Janice Shade was trying to grow her natural products company when she met Louisa Schibli, a blogger who was intrigued by Shade’s attempts to create a community-supported enterprise. The two Vermonters hit it off and vowed to start a company together someday. When the state’s intrastate crowdfunding exemption, the Vermont Small Business Offering Exemption (VSBO), was enacted in 2014, Shade called Schilbli to say, “This is it!”  Their Vermont-only crowdfunding site, Milk Money (you know, like all those nickels and dimes you should’ve spent on milk in elementary school but saved for something better), officially opened for business in August 2016. We talked to Shade (pictured at right) and Schibli (left) about the local investing scene in the Green Mountain State.

What’s the situation like for small business funding in Vermont, and where does Milk Money fit in?

Shade: There aren’t a ton of options. Most capital providers here tend to lean toward bigger, later stage businesses. The one organized angel group I know of is notoriously male-dominated—I once heard it described as stale, pale, male!—and mostly seems to do deals with entrepreneurs outside Vermont.  We are, however, blessed with some less risk-averse “alternative lenders” like Community Capital of Vermont, Opportunities Credit Union, and Vermont Community Loan Fund. They’re wonderful, but entrepreneurs need more options than debt. [Milk Money itself has received an equity investment from the Vermont State Employees Credit Union.]

As we wrote in our original business plan: “We identified a gap in the early stage capital market and created a solution that takes advantage of the opportunity offered by VSBO.” We like to think we’re creating more and better deal flow for later stage funders. A nice example is one of our companies has an arrangement that when they raise $150,000 (of their $250,000 goal) on Milk Money, it will trigger a $100,000 loan with Community Capital. We love that!

Schibli: We created the connection point that brings together businesses and the regulations. The Dept. of Financial Regulation updated the regulations, but it was still daunting and expensive for a business to use VSBO on their own. Milk Money allows all businesses to use VSBO for a capital raise.

Tell me about your progress to date.

Shade: We’ve had six companies launch campaigns on our site since August. They’re raised a total of $100,000 from 60 investors so far. Our latest, Kingdom Fiber, just launched this week.

What types of businesses are right for your platform?

Shade: When we were first anticipating what sort of companies would come to us we were thinking food or food related – they’re just more tangible and easier for people to wrap their heads around. And that’s been borne out. We’re trying to work with companies that aren’t pure startups but have some kind of proven track record.

Give me an example…

Schibli: The Vermont Evaporator Co. has been our most successful company to date. A husband and wife team created a backyard hobbyist version of an evaporator for maple syrup production – you don’t have to build a sugar shack around it. Product companies do have a special appeal, they’re easier for people to understand. That said, our newest offering is a technology company that is bringing fiber optic connectivity to the Northeast Kingdom, a corner of Vermont that was hit hard by the death of the lumber and paper-making industry.

intrastate crowdfunding Vermont Evaporator Company
The Vermont Evaporator Company

Shade: We’re not putting unicorns up on our site. We’re putting up businesses that will stand the test of time, hopefully, and will generate financial returns as well as a social component.

What kind of fees do you charge?

Schibli: We charge the entrepreneur an up front fee of between $3,000 and $5,000, and then we charge a monthly platform fee and for investor relations after the campaign.

Shade: We want to make it affordable for companies to pay up front, but it’s a lot of work for us. So it’s a little artificially low for us because we want this to grow.

What are you seeing in terms of business and investor interest?

Schibli: It’s an education battle. We’ve been introducing people to something they couldn’t do previously. We’ve been going around the state holding events to educate people—and this month we’re starting an online version. We’re saying, maybe carve off a piece and give it back to your local economy. We have a lot of co-ops, CSAs and buy-local sentiment here. Vermonters are ripe for this.

What are businesses choosing: Revenue share? Equity?

Shade: For the most part, they’ve been choosing to do convertible debt. Four of the six are doing convertible notes. Of the others, one is a co-op that’s doing non-voting preferred equity, and one has chosen to do revenue-share. It’s a dairy farm that’s been in the family for a long time that’s now doing value-added products, so it has enough of a proven track record that royalty seemed to work for them.

In your view, what are the merits of intrastate crowdfunding compared to the Regulation Crowdfunding?

Shade: In a word: local!  It’s way easier for potential investors to meet entrepreneurs face-to-face, visit their operations, and basically see the impact of their investment on the company and their community because it’s all literally close to home.

Schibli: This kind of local crowdfunding allows your money to circulate in your own economy instead of going out of state to someone else’s. If I invest via Regulation Crowdfunding, I’m missing all the benefits of investing local and all that good social ROI.

So what’s in store for 2017?

Shade: What are we excited about? Rule 147A! When we first heard about it, we both said, this is a game-changer. One of the toughest things is just getting the word out. [The prohibition on advertising beyond state borders] has been a speed bump, so I think the new rule will build huge momentum with awareness.

Schibli: We have to move beyond people just coming onto the site and considering individual investment opportunities—people will burn out on that after a while. The next step is to create groups where someone does the due diligence and others can put their money in. We have to make this really easy for people.

Related: The SEC Brings Intrastate Offering Rules Into the Modern Era

The SEC Unanimously Approves Intrastate Crowdfunding Changes

VestLo Sees Opportunity for Intrastate Crowdfunding in Illinois

A Vermont Startup Finds it Crowdfunding Sweet Spot


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