Raising Local Money! June 2015

Raising Money in Rural Oregon

New Law Lets Communities Invest in Themselves

Photo here

Who are we?

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Kristin WolffHatch Board Member (& business owner, policy analyst) @kristinwolff #socent#unjobs #workoutloud #startup #realchange

Heather Stafford Assistant Director of Innovation & Entrepreneurship @heathastaffordBusiness Oregon @BusinessOregon

Lisa Dawson Executive Director Northeast Oregon Economic Development District@NEODD (Born & raised in Joseph, OR)

Welcome!

• Oregonian? • Business owner or aspiring

business owner? • Involved in economic

development in your community?

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And congratulations

Your are now a (potential)

investor too!

Today’s Goal

A shared understanding of the law and the opportunities it creates for entrepreneurs and investors (that’s everybody) in rural Oregon.

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A shared understanding of the law and the opportunities it creates for entrepreneurs and particularly investors (that’s everybody) in Oregon.

The Plan • Introduction to the CPO

- Why & why now - What - How it supports NE Oregon’s

economic development strategy • Personal Investment Framework • Making it real! (Special guest: John

MacDougall)

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Securities crowdfunding, equity crowdfunding,

crowdvesting …

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Oregon, in good company

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Investing directly in the kinds of businesses you want to see in

the world is awesome (and we’re all figuring it out, together).

Investing in OurselvesJune 27, 2015

Heather Stafford – Asst. Director of Innovation & Entrepreneurship10

Grow our own

What we do

startupexpand recruit

Building blocks of economic development

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Innovation & Entrepreneurship Division

Grow Our Own

entrepreneurshipinnovation capital

Building blocks of I&E

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Community Capital or Compatible Capital

An Unprecedented Opportunity

for Oregon Businesses

Introducing Oregon’sCommunity Public Offerings

Securities Crowdfunding

A (Surprisingly) Short History • May 27 first statewide team meeting.

• Division of Finance and Corporate Securities (DFCS) decided to make it law through Admin. Rulemaking, 3 Formal Reviews, instead of the much longer route of becoming a statute.

• Rules became law January 15.

Enable citizens to launch enterprises that improve communities.

Work with a number of local partners to counsel, mentor, and train small businesses.

Partners in the CPO Initiative

Why CPOs are Important

• Legal mechanism for entrepreneurs to raise capital from the community

• Ordinary Oregonians and businesses able now to gain (100 year apartheid)

• Entrepreneurs drive the deal

• Potential to inject hundreds of millions of dollars into Oregon’s economy (1% of Oregonian savings)

• Strengthen Oregon’s start-up culture

• Strengthen all regions of Oregon

Limiting Factors

• Credibility of Company

• Public Awareness of Opportunity

• Ability to Connect to Potential Investors

• $250,000 Limit Raised by Company

• $2,500 Limit Invested by an Individual in One Company

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Current Status1. Nine companies filed on Jan 15, and (7

days later) launched on Jan 22

2. In three weeks raised $100K ($207K today)

3. Average investment $1,000 (repeats)

4. Hatch provided over a dozen workshops in preparation to the nine companies

5. Over 60 mentions in press (print, radio, TV)

6. Hatchoregon.com transactions

How Can You Be A Smart Investor?

• SEC: Securities and Exchange Commission (federal regulating body)

• Term Sheet: an individualized written outline for a company’s stock offering

• Intrastate: Oregon based companies (80% or more assets located in Oregon) selling to Oregon Residents

Terms to Know

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• Technical Service Provider (TSP): a small business development center used to review the companies business plan

• Community Public Offering (CPO): Securities as form of “Crowdfunding”

• Oregon Intrastate Offering Exemption (OIO): Exemption from securities registration for domestic offerings

Terms to Know

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The Tricky Stuff

1. Unregistered: No one looks at the documents

2. Waiting Period: 7 days after filing

3. Advertising = Offering: the business is very limited in what can be seen by anyone

4. Self-certification: A person must click a button such as: “I am an Oregon resident” then they can see the ad and offering documents

5. Documentary Evidence: Copy of driver’s license, check, bill – enables purchase of securities

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Key Rules –what the entrepreneur has to file

441-035-0110 Required Filings 1. Letter to Director of the Department of

Consumer and Business Services

2. Submitted copy of all advertising material

3. Statement of meeting with TSP

4. Executive Summary (owners, amount, use of funds)

5. Copy of Offering Disclosures (see next slide)

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Key Rules –what the entrepreneur has to createto offer to investors

441-035-0120 Required Disclosures

• The Team

• The Business What is it, its history & current health, use of funds, and material facts (including any risks)

• The Detail of the SaleType, Deal, Terms & Minimum / Maximum

What Kind of Community Do You Want?

What Companies Would You Support?

What Difference Can We Make?

Some Thoughts...

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Businesses realize higher net incomes, create new, higher-wage jobs, increase product exports, consumers spend and invest more within the region, non-profits and local governments meet needs and enhance

quality of life of citizens

Businesses are successful and adequately financed, individuals invest and spend money locally, locally-produced food eaten in the region and more value-added food exported, more tourists spend more money in the region, infrastructure meets demands of citizens, non-profits accomplish their missions, brownfields

returned to productive use, citizens informed and engaged, downtowns are vibrant

People will be trained, people and organizations will be assisted, projects will be developed and implemented, funding will be invested

Activities will be conducted by NEOEDD staff and partners in each of the focus areas

Focus Areas: Entrepreneurial Development, Food System Development, Tourism Development, Non-Profit & Government Support, Brownfields Redevelopment, Collaborative Planning, Partnerships, Leadership

• Partner Consensus• Hire Hatch Innovation• Develop Strategic Plan• Establish Local ImpactInvesting Opportunity Networks• Host Events – LIIONs, Speakers• Offer Educational Workshops 30

Thinking About Local Investing

1.What makes it worth doing?2.What kind of “returns” do you want?3.How would you prioritize

opportunities you may choose to review? (Price? Expected Return? Timeline? Relationship? Impact? Type of Deal?)

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www.HatchOregon.org

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A Framework Focused on Community

1. Will it help stabilize and strengthen my local economy?

2. Will it help start, expand, or support local entrepreneurs?

3. Will it bring or maintain essential and/or desired products and services that I want to see?

4. Will it circulate investing dollars in our region?

5. Will it forge key relationships with the business community and citizens?

6. Will it help grow other forms of critical community capital?

Marco Vangelisti’s Investment Framework

Transactions

Relationships

BiophiliaSupportive

of Life?

Marco 8 min. http://vimeo.com/95210753

Investment Framework Example #2

4/2014 36

Investment Framework

Examples

Special Guest

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John MacDougall Founder, PresidentMacDougall BatmakersBend, OR

Thank You!

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Lingering Questions?