Starting May 16, all investors, regardless of wealth, will be able to invest in private companies when the last piece of the JOBS Acts goes into effect. In the meantime, there’s an alternative: direct public offerings, or DPOs. These offerings use pre-JOBS Act exemptions to allow private companies to extend investment opportunities to ordinary investors. Issuing companies must produce a comprehensive offering document and register with state securities regulators, but the requirements are much less than a full blown IPO.
DPOs have been around for decades—Ben & Jerry’s famously raised money from Vermont residents in 1984 when they were still operating out of a converted gas station. But they tend to get overshadowed by newer forms of crowdfunding.
Here are 3 DPOs you can invest in today.
Green City Growers
High above Boston’s Fenway Park on a former black tar roof is a lush urban garden. Once abandoned, save for a lone fly ball, the garden now supplies fresh veggies and fruit to the stadium restaurants that feed the hungry hordes of baseball fans. The rooftop farm has earned Green City Growers, the urban farming company behind the project, the designation of the Red Sox’s other farm team.
Founded in 2008, Somerville, Mass.-based Green City Growers (pictured above) converts unused space into residential and corporate gardens and rooftop farms. In addition to Fenway Park, another half-acre rooftop farm supplies produce to a Whole Foods store. Altogether, GCG has grown over 125,000 pounds of organic produce. The company, a certified B Corp., also provides innovative garden education for schools and summer camps.
Jessie Banhazl, GCG’s founder & CEO, decided it was time for the company to do some growing of its own. So over the summer, the company launched a campaign to raise $300,000 through a DPO. The capital will help CGC deepen its impact in the Boston area and expand into surrounding cities in the Northeast, as well as invest in operational infrastructure and equipment to boost efficiency. The company, which employs 12 people year-round and up to 20 during the summer season, is profitable and has averaged 40% annual growth, says Banhazl.
Why a DPO? “We wanted to raise capital in a way that would not only provide funds but engage the community,” she says. “A DPO felt like the right thing for Green City Growers.”
Green City Growers is offering $300,000 in unsecured, subordinated notes that have a 6-year term and pay 5% annual interest.
The offering is open to Massachusetts residents only.
The offering closes on December 31st, 2015!
More info at http://dpo.greencitygrowers.com/
Capital Good Fund
Andy Posner was pursuing a Master’s degree in Environmental Studies at Brown University when he read Banker to the Poor by Dr. Muhammad Yunus, the founder of Grameen bank and the “father of microfinance.” Inspired by Yunus, he launched Capital Good Fund, a nonprofit Community Development Financial Institution (CDFI) that offers small loans of $300 to $13,500 as well as financial coaching to U.S. consumers. Posner sees Capital Good Fund as a way to use financial services to tackle endemic poverty, first in Rhode Island, and then nationwide. His goal: to disrupt the $100 billion payday loan industry that traps so many low income people in a cycle of debt. The company has made more than $1 million in loans to date to low income individuals, with a 91.5% repayment rate.
Posner’s approach is novel. Most CDFIs, including his to date, raise money through grants and donations. With a $4.25 million DPO, Posner hopes to break that reliance on donations and scale up enough for Capital Good Fund to become financially self-sufficient. Investors of all stripes can invest as little $1,000 and earn returns of up to 5 percent. The company plans to use the proceeds to hire 60 people and make 17,000 loans in the next five years, which should generate enough revenue to make it self sufficient.
The $4.25 million debt offering comes with a minimum investment of $1000, and pays from 1% to 5% interest, depending on the amount invested and the length of the loan (7-10 years).
$1000 minimum investment.
Open to residents of Alaska, Connecticut, Hawaii, Illinois, Maine, Massachusetts, Mississippi, Nebraska, New Mexico, New York, Rhode Island, South Dakota, Texas and Vermont.
More info at http://www.socialcapitalfund.org/
In one of the largest DPOs in recent years, WaterFX is seeking $10 million from investors to help build a $30 million, solar-powered water desalination plant—the first in California’s drought-stricken Central Valley and the largest solar desalination plant in the U.S. The company plans to secure a loan for the remaining amount.
HydroRevolution, as the plant is called, is an expansion of a demonstration plant that operated last year in the Panoche Water and Drainage District. Unlike most desalination plants, which distill seawater, this one treats millions of gallons of tainted water that has been collected from farm irrigation runoff. It will eventually be capable of producing up to 1.6 billion gallons of freshwater per year, allowing farmers to use local water rather than importing it. The salt and minerals left over from the process will be turned into byproducts with industrial applications.
California residents only.
The company is offering up to 2,000,000 shares of Series A Preferred Stock with a 6% dividend, at $5 a share. Minimum investment: $5,000
More info at http://waterfx.co/hydrorevolution/