INVEST LOCAL COLORADO LLC
A Money Marketplace Where Ordinary People Can Sponsor Local Organizations!
The Denver Business Journal recognized Karl Dakin in its first Who’s Who in Impact Investing:Rocky Mountain Region. An awards ceremony was held on November 23rd as part of Colorado Impact Days hosted by the Impact Finance Center.
The Impact Finance Center is a nonprofit academic center dedicated to teaching foundations, family offices and individual investors how to make investments into companies, organizations, projects and funds with the intent to generate a measurable financial return and a beneficial social, environmental and community impact.
Stephanie Gripne, the founder and Executive Director of the Impact Finance Center, described the event as the next step in ‘develop(ing) a phonebook of key players in the movement and marketplace.”
“I am extremely pleased to be one of 77 people recognized in this event,” said Karl Dakin, a professional entrepreneur and activist in improving Colorado’s capital ecosystem. “I see this recognition as a reflection of the work by the team at Invest Local Colorado LLC where we have successfully launched our investment crowdfunding platform. It is now possible for ordinary people to financially support their Main Street businesses and have greater impact.” http://www.investlocalcolorado.com
The art and science of building a ‘crowd’ for Investment crowdfunding may be compared with running for mayor in a small community.
A person who starts their business becomes their own boss. However, when an entrepreneur accepts investment money, they now have an obligation to look out for that investment money for the benefit of the investors. There is a new boss.
When a person raises money from their community through crowdfunding, they have a responsibility to their community. But, first, to obtain investments from their community, their community has to know them and respect them. The actions taken to become known and to gain respect can be called ‘crowd building’.
The steps taken to become mayor may serve as a template for an entrepreneur raising community from their community.
a. Participate in one or more civic organization
b. Participate in one or more professional organizations
c. Support two or more local charities
5. Be visible
a. Speak - share knowledge
b. Write – set up a website, post blogs, write editorials
c. Act – dedicate time and resources to making the world a better place
a. Ask for their input
b. Ask for their help and support
c. Acknowledge those who try
d. Acknowledge greater those who succeed
e. Support those who are making a difference
This takes a lot of work. It usually takes a lot of time. But, this investment may pay rewards over a long period of time. And, if a ballot box is set up within the community, this work can get a person elected by the community as the CEO of their own business.
Karl Dakin, President
By Monica Mendoza – Reporter, Denver Business Journal, Oct 31, 2017, 6:30am MST
Denver Business Journal Article
Two years ago, the Colorado Crowdfunding Act was rolled out with high hopes.
Its backers promised it would make investing more accessible to the average person who wanted a piece of the equity pie and it would help small businesses and startups raise the capital that had often eluded them.
But after all the buzz and they hype, there was silence.
“It was all quiet on the crowdfunding front,” said Gerald Rome, Colorado's securities commissioner.
Rome convened a panel of equity crowdfunding experts Oct. 25 at the University of Colorado Denver Business School to discuss why equity crowdfunding -- the kind in which an investor gets a stake in a company -- has been so slow to takeoff.
So far there has only been one equity crowdfunding campaign launched -- Paradox Ventures Inc., a Colorado hemp and extracting oil company which is trying to raise $250,000 to expand its business.
Karl Dakin, a lawyer and small business advocate, says the law was not a flop and he still believes equity crowdfunding has a place in raising money for small businesses and startups.
"We think the hard part is behind us," Dakin said. "Right now I see it all going forward."
Dakin is behind one of the approved equity crowdfunding sites, Invest Local, which featured the first fundraising campaign.
The biggest issue is that it took two years to get an operational website where equity crowdfunding offerings could be made, he said. The sites, called intermediaries, are listed on the Colorado Division of Securities website. They ensure that the businesses meet the disclosure rules and that the investors are from Colorado.
As of late October, there are now two websites up and running -- Invest Local and CFEX Holdings.
The sites had to be built from scratch and it took time, said Dakin, principal in Dakin Capital Services LLC, which plans and manages capital campaigns.
“But now that the site is open, we don’t see serious obstacles to expanding this rapidly and making this available as a common service to small businesses in Colorado,” Dakin said.
The challenge now will be getting the word out that equity crowdfunding is as a way to raise money for a new business or expansion of an existing business.
“The thing that will sell it is a successful raise,” Dakin said.
In 2015, Colorado became the 24th state to enact a law that allows non-accredited investors to make small equity investments in a privately held business in the state over the internet.
A Colorado business can now raise a maximum of $1 million from equity crowdfunding, and up to $2 million if the business submits audited financial statements to the state’s Division of Securities.
Before equity crowdfunding, investors had to be accredited – which means they have an annual income of $200,000 and a net worth that exceeds $1 million. Dakin said it limited who could invest. Under equity crowdfunding, anyone can invest up to $5,000 in a business.
Roughly around the same time Colorado was setting up its rules for equity crowdfunding, the rules for the federal Jumpstart Our Business Startups (JOBS) Act were approved. The law was signed by President Barack Obama in 2012.
But the U.S. Securities and Exchange Commission was slow to write the rules under the new law; those rules were finalized in May 2016.
It was a shift from existing non-equity crowdfunding models like Kickstarter and Indiegogo, where someone with an idea asks for money via an online pitch, but instead of equity, gives out perks like T-shirts or first dibs on a product.
Under the JOBS Act, investors don’t have to be accredited, and entrepreneurs could use the internet to pitch their ideas.
Obama called the JOBS Act a “game changer,” saying that average Americans could invest in the businesses they believed in.
But even at the federal level, equity crowdfunding has been slow to take off. Critics say supporters overestimated the enthusiasm for equity crowdfunding.
CU Boulder law professor Andrew Schwartz recently went to New Zealand, as a Fulbright research scholar, to study its equity crowdfunding laws, which have been operational for three years.
New Zealand has had successes, he said. There, businesses can raise up to $2 million in a 12-month period using equity crowdfunding. He saw some stark differences in the rules between New Zealand and Colorado, which have comparable economies.
“In Colorado, an issuer who wants to raise money must file certain forms with certain disclosures with the Division of Securities and provide it to investors and provide a quarterly report also to SEC and investors,” he said. “New Zealand has no mandatory disclosures. There is no form to file.”
In the first year of equity crowdfunding, New Zealand businesses raised 30 times as much as U.S companies and had 13 times as many offerings, when scaling for the two nations' sizes, Schwartz said. The raises were successful about 80 percent of the time compared to 50 percent of the time in the U.S.
But Rome is a little squeamish about running an equity crowdfunding program – selling a security -- with no disclosure required. And no one in Colorado seems to be advocating for tossing out the disclosure requirements.
“I like laissez faire, but I also like for people to get into things with their eyes open and having an opportunity to evaluate all the facts,” said Jack Donenfeld, a Boulder-based securities lawyer and general counsel to Boomtown Accelerator in Boulder, which focuses on internet, mobile and software firms.
Attorney Herrick Lidstone, managing director of Greenwood Village law firm Burns, Figa & Will, has an alternative idea.
Businesses looking to raise small amounts – less than $200,000 – shouldn’t be mandated to use the intermediary. It should be voluntary, he said. It could cost a business $50,000 to run a crowdfunding campaign on an intermediary site and with fees, escrow and marketing costs.
“Every time you add a layer to the mix, you are costing them money,” he said.
There might be more small businesses trying equity crowdfunding if they could put up an offering on their own websites – like an investor page.
Rome said he wants equity crowdfunding to work and he’s open to adjusting some of the rules, which he said were designed to protect the investors.
Dakin said the rules and regulations have not been the main hang-up. The role of the Colorado intermediary was designed to be low cost – the intermediary cannot engage in marketing or take a stake in the business. Most businesses wouldn't have the infrastructure to handle the investments and keep up with the SEC rules.
"The largest issue is generally a lack of knowledge and a lack of systems available for people to use," he said.
But now there are two approved websites and the crowdfunding is ready for takeoff, he believes.
"I think we will get there eventually once people see success stories and see this as an alternative to the only choice they had before," he said.DT Updated an hour ago
New program will help businesses test the waters by building their crowd.
DENVER, CO—October 30, 2017 Invest Local Colorado has launched a special program to enable businesses, social enterprises and community projects build their fan base of supporters. This free program is targeted at the main challenge to successful crowdfunding – not having a ‘crowd’.
‘Crowd’ + ‘Funding’ = ‘Success’. In order for any organization to raise money through crowdfunding it needs a crowd. A crowd is a group of people with a common interest in the products or services of the organization, in the social causes that it may advance, in the community where it is located or any other strong reason to want the organization to succeed. Although most organizations will have more than one group of prospective supporters, these organizations do not have a crowd. Even though an organization may know a lot of people and are favorably viewed by their customers and community, these people have not been identified and organized to step up and participate in a capital campaign.
Invest Local Colorado will offer its Build Your Own Crowd (BYOC) Program for free. Participants will have an opportunity to identify and validate their crowds. Each organization will invite their supporters to join the Colorado Capital Club – an association of Colorado residents interested in financially supporting Colorado Main Street businesses. Each individual will declare their support for their favorite organization during the Membership application process. This information will be collected and shared with participants in the BYOC Program to help them build their crowds.
“Most businesses incorrectly assume that by standing on a stage and making a pitch or by listing on a crowdfunding platform, that people they don’t know will come to them and make an investment. You need a ‘crowd’ to raise funding. The failure to build a crowd in advance of a capital campaign is the single greatest reason for failure of crowdfunding campaigns,” said Karl Dakin, CEO of Invest Local Colorado LLC. “People only invest in businesses where they know the owners and a relationship exists between the business and investor. Our BYOC Program will help businesses create and manage those relationships.”
Participants in the BYOC Program may attend free workshops by the Local Money Marketplace where they will learn tools, techniques and systems for crowd building. As an extra incentive, Invest Local Colorado is offering to waive its standard $5,000 listing fee to any organization that can get 500 or more of their supporters to join the Colorado Capital Club and declare for that organization.
More information on the Build Your Own Crowd (BYOC) Program is available at the Invest Local Colorado platform: http://www.investlocalcolorado.com/raise-money. Organizations interested in participating in the program should contact Karl Dakin, CEO, Invest Local Colorado LLC at firstname.lastname@example.org.
West End Economic Development Corporation is working to offset the closure of the power plant and mines in the Paradox Valley of Colorado by supporting businesses in the new hemp industry.
Paradox Ventures has leased space from West End Economic Development Corporation in the old Nucla schoolhouse where it will extract oil from hemp plants grown this summer in Montrose County.
More information is available in this Denver Post article:
Invest Local Colorado LLC has launched its investment crowdfunding platform with a listing of a capital campaign by Paradox Ventures. This action raises a number of questions:
You may have heard of crowdfunding. You may even have participated in a Kickstarter or Indiegogo campaign. However, you probably have not invested in a Main Street business located in Colorado. This is a local business where you may shop, where one of your relatives may be employed and which pays taxes to support your schools, for your safety and for city, county and state buildings and roadways. Typically, your investments are completed through your employer where your money is put into a mutual fund representing a list of businesses whose profits may never come to Colorado.
Investment crowdfunding allows you to participate in the upside of a local business. Any form of investment has some degree of risk – ranging from very low to very high that you may not get your money back. This risk can be offset if it is a business where you shop. The business can offer you price discounts on their products or services that may be greater than the amount of your investment.
A local business can offer benefits to every resident of Colorado that are not available from a business that is outside of Colorado or outside of the United States. These benefits can be realized without making any investment at all. Simply by sustaining and growing, a local business contributes to the economic health of the community by hiring people and paying taxes. Some businesses actively support local charities, participate in community organizations and projects and serve to attract other businesses into the community.
Crowdfunding in Colorado is now possible through the Colorado Crowdfunding Act, a law passed in 2015 that we sponsored. It rolls back 80 years of securities laws and regulations that resulted in wealth discrimination. The result was that the 3% of the population (accredited investors) were making nearly 100% of the investment decisions that benefited only 2% of the businesses seeking capital. Local Money Marketplace PBC is dedicated to improving access to capital by improving Colorado’s capital eco-system.
Paradox Ventures is a new company that is just completed harvest of its first crop of hemp. It has entered into a lease of the old schoolhouse in Nucla, Colorado owned by West End Economic Development Corporation where it will be extracting hemp oil for use in a variety of healthcare products. http://www.paradoxpride.com These new jobs will help a community affected by the closure of the power plant and local mines. See the recent article in the Denver Post: http://www.denverpost.com/2017/10/27/montrose-county-west-end-revamps-rural-economy-with-hemp-less-mining-uranium-colorado-divide/
Instead of seeking money just from wealthy people who meet the definition of accredited investors, Paradox Ventures is seeking to raise up to $500,000 in money from ordinary people – any resident of the State of Colorado. A person may make an investment for as little as $500. For this financial support, Paradox is granting non-voting stock. In addition, they have teamed up with Ambary Gardens of Kittredge, Colorado to offer price discounts of 10% to 25% on the products Ambary Gardens will make with hemp oil (CBD) extracted by Paradox Ventures. https://ambarygardens.com/
Paradox Ventures has listed its capital campaign on the Invest Local Colorado platform. To learn more about Paradox Ventures, you may go the platform. http://www.investlocalcolorado.com/campaigns.
For a small annual fee of $10, you may become a member of Invest Local Colorado’s Colorado Capital Club where you can learn about how to financially support a Main Street business and you can invest in businesses like Paradox Ventures. Members of the Club will receive a free copy of our Investing in Main Street Workbook and will receive passes to Investing in Main Street Workshops.
Investment crowdfunding now gives you the capability to support those businesses, social enterprises and community projects in Colorado that you like, that you want to see succeed and whose success can help Colorado’s economy, particularly in those communities that are not experiencing the growth of Denver. Any savings on products or services that you buy and any possible return on investment just creates greater value.
If you are interested in the economic health of Colorado, you should consider all the places where you may shop over the next 12 months and ask yourself if you would like to help that business grow. Envision a future where you have a stake in a number of local businesses that know your name, value your opinion and appreciate your loyalty.
Investment crowdfunding is that powerful.
Local Money Marketplace PBC
By Karl Dakin
Dakin Capital Guild LLC, Local Money Marketplace PBC, Invest Local Colorado. LLC and Associated Fund Raising Co-ops and Funding Financing Funds within a Proposed Colorado Capital Eco-System
In 2007, Colorado, with the rest of the world, fell into the Great Recession. The public consciousness came to recognize entrepreneurs and innovation as the solution to re-start and re-energize the economy.
When the recession started, the capital industry was governed by federal and state laws that have their foundation in the Great Depression of the 1930’s. The Congress enacted laws in 1933 and 1934 that set as a default the concept that ordinary people were incapable of making good investment decisions without the oversight of the government.
Since that time, additional laws and rules have led to a highly distorted capital industry where nearly all investment in startups and small businesses are made only by wealthy individuals. These wealthy individuals are known as ‘accredited investors’. They make up less than 3% of the population.
These arbitrarily qualified individuals are permitted to invest with only limited restrictions. An accredited investor rarely has any experience or training in making investments or any training or experience in management of innovation or small businesses. As a result, these favored individuals historically invest in less than 2% of the investment opportunities that they review.
This great mismatch between wealthy individuals as a source of capital and the capital needs of the Main Street business accounts for the recurring fact that ‘access to capital’ is commonly considered one of the top five challenges to startup and small businesses decade after decade.
As a consequence of Great Recession, scare capital became non-existent capital. Money needed by startup and small businesses largely disappeared. To make matters worse, this economic downturn followed closely after shrinkage of the capital markets caused by 9/11.
And nothing happened for four years. Then, despite political partisanship in Congress, the federal JOBS Act was passed in 2012
And nothing happened for four years. The Congress tasked the U.S. Securities and Exchange Commission with adopting rules for implementation of the law. In a demonstration of bureaucracy and a federal government that caters to financial institutions ‘too big to fail’, the SEC failed to adopt rules and enable the law to take effect till May of 2016.
The Colorado Crowdfunding Act was passed in March of 2015 with unanimous approval of both the Colorado House and Senate. The Rules were adopted in August of that year.
And nothing happened for two years. This year, CFEX registered as an intermediary and listed its first campaign. Despite attaining the goal of the capital campaign for a real estate development project, the project fell apart and was unsuccessful. Invest Local Colorado, after a number of false starts beginning in 2015, listed its first campaign on October 13, 2017 for Paradox Ventures.
Investment crowdfunding has proven not to be a simple expansion of the existing capital industry to include non-accredited investors, but an alternative capital industry with its own requirements for success.
There are a large number of factors that have delayed and constrained the potential of the Colorado Crowdfunding Act:
In summary, the passage of the Colorado Crowdfunding Act represents an enabling event. To realize the potential of the Act, it will be necessary for new processes, methods and services to be developed, understood and culturally accepted that match ordinary people with investment opportunities in Main Street businesses. Fundamental marketing principals should guide the formation of a marketplace instead of expectations biased by historical preferential treatment of angel investors.
Although there is room for improvement of the Colorado Crowdfunding Act, legislative changes and new rule making will not address the key issues. It will be necessary for businesses and the 4.3 million adult residents of Colorado to become respectively aware of investment crowdfunding as an alternative source of capital and as a means to supporting their favorite Main Street businesses. This will best be accomplished by a series of successful investment crowdfunding campaigns that demonstrate successful crowdfunding is achieved by:
Dakin Capital Guild LLC
Have you ever received a stock tip – information that caused you to get out your check book and call your broker? Ordinarily, this person is a friend, a family member or a work associate. Did you trust the person who gave you the information? Did you act on the information and buy the stock?
Would you act on a stock tip from someone you don’t know? Someone you don’t know, possibly even the business looking for money, contacts you and asks you to invest?
Worse yet, the contact is in the form of an email. It has been sent to you and many others. It may not be clear why you have been selected to receive the email. You are directed to a website where you are asked to make payment. No one has actually talked with you. Yet, the business seeking money expects that you will simply make a payment.
Will you invest? Probably not. Statistics say no. Yet, this is the situation commonly presented by investment crowdfunding. It is the common practice of businesses to post their offering on a crowdfunding platform and wait for money to arrive. This is the reason most crowdfunding campaigns fail.
What would improve the likelihood that you would invest? If you are seeking money, what would improve the likelihood that you will meet your capital goals?
Let’s start with an introduction. The art of raising money is based upon relationships. The investor either knows a principal in the business seeking money or has received an endorsement from someone they trust.
Let’s identify benefits. Benefits from the success of your business and benefits from investing (these are not the same). Trying to understand investors is a fundamental marketing principal where the investor is the customer and your business is the product. Promotion of a capital campaign should focus on those investor candidates who stand to gain the most.
Let’s seek feedback. Before you structure your offer, find out if it is attractive. Talk to lots and lots of investor candidates. Find out what they want, what they need and what they will financially support. Shape your offer to custom fit your profiled investor candidate.
Let’s build trust. Demonstrate care for your customers. Support your community. Contribute to your charity. Better yet, integrate all of this within your business plan, policy and practice.
Otherwise, investment crowdfunding is simply a professional form of begging – little better than a panhandler standing on a street corner and hoping for someone’s generosity.
Successful crowdfunding campaigns will seek investment from people within whom they have a relationship, that will offer an attractive deal, that will engage in a true long-term relationship that is representative of a kind of business that everyone wants in their community.
Invest Local Colorado LLC
Paradox Pride launched its investment crowdfunding campaign on the Invest Local Colorado crowdfunding platform.
DENVER, CO—October 14, 2017 Invest Local Colorado kicked off its investment crowdfunding platform with the listing of Paradox Pride - a Western Slope startup business that is engaged in the farming of hemp and extraction of hemp oil for healthcare applications.
Paradox Pride held a press conference at the State of Colorado Capitol Building. State Senator Don Coram, one of the principals in Paradox Pride, explained that “In rural Colorado, we don’t need consultants. We need capital.” He went on to explain that investment crowdfunding gives the ordinary person, the people who live in western Colorado, a chance to participate in investment offerings and financially support the small businesses that create the new jobs within rural communities. He pointed out that Paradox Pride is creating jobs in Nucla, Colorado – a small town that is facing an economic downturn from the closure of the power plant. http://www.paradoxpride.com
Senator Coram expressed praise for Invest Local Colorado for establishing its investment crowdfunding platform and providing Paradox Pride with the expertise to raise money through this new capital source.
A listing by a business on the Invest Local Colorado platform has three levels: a short paragraph, a business summary page and a proposal for financial support page. To conform to federal and Colorado law, only individuals who have demonstrated that they are residents of Colorado may view the offering of Paradox Pride and other capital campaigns listed on the Invest Local Colorado platform.
Invest Local Colorado developed a unique business model to manage demonstration of residency and meet the objective of the Colorado Crowdfunding Act to enable low cost capital campaigns by Colorado businesses. It has established the Colorado Capital Club as an association of Colorado residents that have an interest in financially supporting Colorado Main Street businesses. For a small annual fee of $10, Invest Local Colorado provides members of the Club with education materials and programs on ‘Investing in Main Street’ published by the Local Money Marketplace. http://www.localmoneymarketplace.com. This fee also covers the cost of verifying state residency. Only members of the Colorado Capital Club can see proposals and invest in businesses, social enterprises and community projects listed on the Invest Local Colorado platform.
“We studied and experimented with many different possible business models,” said Karl Dakin, President of Invest Local Colorado. “Unlike other crowdfunding platforms that are focused on wealthy people, we wanted a low cost approach that would empower ordinary people to financially support Main Street businesses. These businesses always face the challenge of ‘access to capital’ which hinders innovation and the startup and growth of small businesses.”
Invest Local Colorado is now engaged in making the 4.3 million adult residents of Colorado aware of this new opportunity to support Main Street businesses. It will be conducting workshops, making presentations at civic and business organizations, publishing information on its platform and supporting fund raising co-ops. Organizations interested in having a speaker on investment crowdfunding at one of their meetings are encouraged to contact Karl Dakin at email@example.com.
Invest Local Colorado is also in negotiations with several existing and startup organizations about listing their investment crowdfunding campaigns on its platform. It is projected that it will list 40 to 50 capital campaigns during the next 12 months seeking to raise a total of over $25 million in funding.
Address:7148 S. Andes Circle, Centennial, CO 80016