Oregon Business Crowd Funding Has Begun
By: Nathan Knottingham, McMinnville Area Chamber of Commerce
Yesterday, January 22, 2015 marked a rather historic day for private businesses in Oregon. As of now, businesses who are qualified, are able to offer public options to the community for investment. “…Oregon will officially adopt the rules, which will allow Oregon-based companies to raise up to $250,000 from Oregon residents, up to $2,500 per person. The idea is to foster innovation and help young companies get past those perilous early days when failure is high and lenders are wary” (source: www.bizjournals.com).
Upon launch there were 10 companies that went live and are already receiving funding. You could think of this in the same way a start-up would you www.indiegogo.com, or www.gofundme.com, or a number of other crowdfunding sites to illicit donations and investors. However, the big change is the regulation that companies must be open to for admittance to the program. And there is a down side risk to investors because just like any national stock or investment the company you invest in could fail thereby losing your investment. Though the positives, to me, are so much greater than the potential risks.
How could this play out for a community like McMinnville? Here’s a possible scenario: A locally owned business needs to buy a piece of equipment to expand operations. Maybe they make a product or supply a service to customers outside of McMinnville and Yamhill County. Until now they have lived in the community, but from a business position they haven’t felt very connected to the community. But this new piece of equipment is expensive and for one reason or another they come up short in funding it, say $100,000 or so. Now with the Securities Exemption they can go through a process to start selling a security or share in their company to finance their growth. The community, previously unable to support this local business with a “Shop Local” attitude, can now invest in this local business to help them grow and expand! How cool is that!
I’m not an investment officer, finance expert, and I don’t hold any license of any kind for that work. We have great members who do that work and I expect they will be able to answer many questions on this. But the potential for communities to continue to “Grow Their Own” through localized funding…that is just a great opportunity.
There is a lot more information to be read. One great source to read the OAR about this specifically is through www.genius.com. It includes a lot of links and subtext that helps identify changes to the rules. The Department of Consumer and Business Services is the governing body as well. I was first alerted to this story from an OPB radio program I like called Think Out Loud, produced in Portland.
I’m interested to get your thoughts too. If you need help looking into this program please let me know: email@example.com.