When it comes to investment crowdfunding, the spotlight has been on the federal JOBS Act. But that overlooks the flurry of innovation and experimentation happening at the local level, where 30 states (and counting) have passed their own mini-JOBS Acts that allow local investment within their own borders. Now, the state crowdfunding movement has its own conference: Called ComCap16 (for community capital), it takes place April 26-28 in Portland, OR. We caught up with ComCap organizer Amy Pearl, the founder of Hatch Innovation (pictured above) and the driving force behind her state’s Community Public Offering (CPO) exemption, to find out more (Full disclosure: I’ll be leading several panels at the conference).
Amy Cortese: What’s the idea behind ComCap?
Amy Pearl: We held a conference last year for folks throughout Oregon who have a stake in the success of the CPO. This year we’re expanding the conversation to a national audience.
It’s a chance to bring together the people who are now confronted (and excited about) implementing these new state investing laws—helping entrepreneurs and potential investors use the laws wisely and well! It’s all new, and if we can get together and learn, we will all be a lot more successful. It’s the first time all of us will be in the same place, so it will be really exciting!
AC: What are some of the more pressing issues the conference will explore?
AP: Education, education, education. Investors AND entrepreneurs. What works? How do we help people understand something they really have no experience with? It’s a sticky question, but we have to do it, and soon. Early on we created a fun video for investor education called “Let’s Be Frank” where we translated the “fine print” into English in a fun way. Other issues are diversity in entrepreneurship and reaching the young, or the new “Crowdfunding Generation.”
AC: What in your view are the benefits of state-based crowdfunding over other forms?
AP: I have come to love the (admittedly artificial) boundary of state lines. It makes for an interesting perspective on local—suddenly rural and urban and everyone in the state is “my community”—and I like that. Cities that used to compete for external white elephants can now share resources and help each other, collaborating where competition was once the more common mode. Entrepreneurs from rural can connect with urban investors, and vice versa. Also, it makes us see the extent of what our neighborhoods can be.
AC: State-based crowdfunding has been a little slow to take off, though…
AP: Slow to take off, but compared to what… I don’t know! I’m pretty happy with our nearing $400,000 for small business since January 2015 [when the CPO was introduced]. The maximum investment per person in Oregon is $2,500, so this number represents nearly 300 new investors. But, sure, I would love to have hit $1 million our first year. It will happen.
“We want to hear voices of underrepresented groups, rural entrepreneurs, women, natives—and really dig into how these laws can only open up access to capital”
I like to say these laws are like a toddler, and we have to monitor her well—make sure she doesn’t go off a cliff or get herself into a dangerous place she can’t get out of. Keep her fed and happy. Help her learn new words and concepts. You know, the metaphor is a good one.
AC: What’s been the experience to date in Oregon with the CPO law, which I know you personally helped to write? What’s been effective? What are the biggest challenges?
AP: Well, we’ve learned a few things. One is that people here seem to like equity over debt. We’ve learned that over half of our investors are female. We’ve learned that if you don’t ask for money, turns out you won’t get any investors (go figure!). We’re also learning how to talk to people about it, and that it takes time to grok. When people get it, they get excited about it. But it’s not a habit we’ve built in, so we need to figure out ways to help people engage. We’ve had two success fundings so far in Oregon and more on the way. I’m looking forward to hitting the $500,000 mark this year!
Related: Crowdfundng, Oregon Style
We’ve also learned that this law has attracted innovators—people who are doing all kinds of things differently. It’s exciting to meet them and hear all the ideas, from high tech to manufacturing to food, rural and urban, there are lots of entrepreneurs to invest in.
AC: Title III of the JOBS Act goes live in May, just a couple of weeks after ComCap. How do you think that will impact the state crowdfunding movement?
AP: I’m ignoring it! Or trying to. I know it’s going to be so noisy, but while I was so excited about it years ago, I’m now much more committed to state investing. I think it brings us to see our own communities so much more acutely, and it helps us focus on the real outcome, which is local resiliency and strength. It is going to be fun to watch for sure!
Watch the ComCap16 conference trailer here.
AC: Why should people come to ComCap16?
AP: Why indeed! If you are struggling to understand, lead, or implement local investing in your state, this is the conference to attend. We want to hear voices of underrepresented groups, rural entrepreneurs, women, natives—and really dig into what isn’t working and how these laws can not only open up access to capital, but truly disrupt that status quo of the white male/high tech/global market mind share domination. You know what I mean…