It’s no secret that for any small business, raising capital is a challenge. Funding options are available through bank loans, grants, even angel investments or venture capital, but only if you meet the criteria required to be considered for these types of funding models.
However, with the advent of investment crowdfunding coming on the scene in North Carolina, some business owners have chosen to pursue the new and innovative route of “community capital.” These entrepreneurs put forth their business opportunity to North Carolina residents who they hope will make up their “crowd” of interested and engaged investors.
While adoption has been slow since the N.C. PACES Act went into effect in 2017, the tenets of what has made for successful investment crowdfunding capital campaigns across the country have flourished in our state. Issuers – or the business owners who apply for and receive an exemption from the state to offer the sale of a security under the new regulations – tap into a crowd of potential investors based on any number of criteria.
With the first five issuers receiving their exemption from the North Carolina secretary of state to issue their securities under the N.C. PACES Act on the INVESTinNC portal, we’re taking this opportunity to learn from the issuers themselves what appealed to them about the concept of pursuing community-based capital.
When it came time for Roderick Robinson, CEO of Black Claw Energy, to fund the launch of his organization, there were multiple reasons to choose the investment crowdfunding model.
“There is a natural affinity toward green energy and the spread of solar technologies, which originally pointed me toward investment crowdfunding, but I also saw an opportunity to tap into several specific groups across the state that might support my efforts,” Robinson said. “Being a U.S. Army veteran, having served as a member of the 82nd Airborne Division and 18th Airborne Corps at Fort Bragg, I’ve enjoyed getting to know other veteran entrepreneurs that were taking elements of what they learned in the military and applying them to civilian life. There’s always been the mentality of vets supporting vets so that seemed like a crowd to which I would want to communicate my offering.”
In addition, Robinson recognizes the lack of traditional funding options available in his home market of Troy, N.C., and expects to connect with local economic development leaders to help spread the word that the N.C. PACES Act offers a new opportunity for rural entrepreneurs to find success without going to the primary financing centers across the State.
Pete Hexter, CEO of Bloom for Good, saw the opportunity from a different angle.
“We’re a fundraising company that helps local, community-based organizations like schools and youth sports teams raise money to fund their operations, and recently we’ve signed on to help larger groups like Future Farmers of America and 4-H do the same,” Hexter said. “As a serial entrepreneur, I have a very clear understanding of the ways to capitalize a company’s growth, and investment crowdfunding appealed to me because it really allows Bloom to practice what it preaches – members of a community supporting the community.”
He continued, “Being based in Wilmington, N.C., we have a trickle of investment dollars here, but they’re closely guarded. However, with recent efforts to amplify a broader scope of economic development opportunities in the Cape Fear Region, the timing seemed to be perfect.”
Cape Fear Advanced Circulation’s decision to capitalize through investment crowdfunding was based on co-founders Nancy Politan and Tammi D’Agostino seeing their intrinsically community-focused offering being deemed valuable by the members of the community in which they plan to operate.
“We’ll be offering BEMER vascular therapies along with massage therapy to clients in and around Wilmington. This will be one of the first therapeutic offerings available using this innovative medical device to enhance blood flow, nutrient and oxygen supply, cardiac function, physical fitness, endurance, strength, energy, and improve sleep management,” Politan said. “These issues affect a very large cross-section of the population, and the effects are well-documented so we thought that giving those that will benefit a chance to potentially make some investment into the venture was a great idea.”
D’Agostino added, “And since we both have existing clients that are already aware of these groundbreaking therapies, we already have many fans and advocates that might potentially have interest in being involved beyond simply coming to us for care.”
Valarie Burke of Charlotte, CEO and Founder of Let’s Wait, is on a mission to make dating easier for celibate singles and wants to break the cycle of online matches and multiple dates that only lead to the awkward, “I don’t have sex,” conversation.
In targeting her offering to a niche audience that has been traditionally underserved by today’s prevalence of “hook-up” dating apps, the decision was simple.
“More and more busy professionals are looking for a work/life balance that allows them to date but in a way that encourages a deeper connection than that provided by most of the existing dating apps,” Burke explained. “Because of the specificity of my target audience and their dedication to the practice of celibacy, I thought that by putting forth my offering through investment crowdfunding, I could not only raise the money but create a large network of both customers and advocates to help us grow in ways well beyond simply achieving our capitalization goals.”
When Rob Marrin, CEO of Marrins Moving, decided to fund the expansion of his full-service moving and storage company based in Cary, the opportunity to share his existing success and the potential success of his projected future growth with his customers, friends and family was extremely appealing.
“I run my company with a focus on not only customer service, but providing a supportive environment to those with whom I have an opportunity to work,” Marrin said. “It’s an important aspect to how we run our business and it positively touches a lot of people. Because of that, I felt really good about using the new investment crowdfunding regulations to gain support from those that I’ve tried so hard to help support on my own through my business over these many years.”
Also, a U.S. Army veteran, Marrin hires as many veterans as possible, which in combination with his customers, has created a very large network of those he considers potential investors.
“It’s those people that I’d like to see come onboard – customers, employees, neighbors, friends – to share in something special,” he said.
Whether it’s the concept of investors as customers, a geographically specific appeal, targeting niche affinity groups for support, leveraging a large network of existing relationships, or simply the idea of a community supporting local businesses, it’s clear that investment crowdfunding appeals to business owners in many different ways.
With these five companies blazing the trail in North Carolina, we’re eager to see how success finds them as they connect with those crowds that will help take them to the next level.
INVESTinNC is a program designed to inform North Carolina investors and small business owners of new investment crowdfunding opportunities.