A new crowdfunding platform aims to help social entrepreneurs—especially women and people of color—raise funds and give investors the chance to “put their money where their heart is.”
Crowdfund Mainstreet, co-founded by attorneys Michelle Thimesch and Jenny Kassan, is a Regulation Crowdfunding (or Reg CF) platform made possible under Title III of the JOBS (Jumpstart Our Business Startups) Act passed in 2012. The law made it easier for anyone to invest in small businesses through crowdfunding. The law allows entrepreneurs to raise up to $1,070,000 a year in crowdfunding capital.
Thimesch and Kassan have a history of providing legal services to social entrepreneurs. Kassan specializes in helping issuers craft their offerings for maximum results. “We believe that customizing and crafting offerings based on your company, rather than picking something off the shelf, is one of the things that will distinguish the issuers on our platforms,” Thimesch said in an interview with Devin Thorpe, host of the Your Mark on the World podcast.
She said entrepreneurs should go into the crowdfunding process with a comprehensive understanding of their business models. “The more you understand about that, the better equipped you will be to actually craft an offering that makes sense,” she said. “Many entrepreneurs do not understand they have that option because they’re used to the VC world where the investors hand you the term sheet. You are actually in a position to craft your own offering.”
In a video on the Crowdfund Mainstreet website, Kassan said crowdfunding can be a boon to traditionally marginalized entrepreneurs. “Our financial system is really not designed to serve probably 99.9 percent of businesses,” she said. “If you are a woman or a person of color, your chances of getting financing from a bank or a professional investor are even less.”
Through crowdfunding, this new and more diverse generation of entrepreneurs can create businesses that will make a real difference. “When Title III of the JOBS Act passed, I knew it was a game-changing law,” Thimesch said. “I knew that, in its highest, most exalted state, this piece of legislation could actually serve to revitalize communities and shift money from Wall Street to Main Street, which is what needs to happen to make big economic change in our country.”
Thimesch said Crowfund Mainstreet is designed for “America’s unsung entrepreneurial heroes and the people who want to invest their savings in the kinds of companies that are doing things they want to see in the world.”
Crowdfunding for social entrepreneurship also means you don’t have to be rich to invest in a startup, Kassan said. In fact, many people are already investors and don’t realize it. “When most people think about … an investor … they will often picture, maybe, the people on ‘Shark Tank.’ But the truth is, 99.7 percent of investors in our country are just regular folks. They don’t even think about themselves as investors. They would never call themselves investors. But they are investors. They have mutual funds. They have retirement accounts. These are the investors we want to see on Crowdfund Mainstreet. These are the investors who are able to really put their money where their heart is.”
And the Crowdfund Mainstreet entrepreneurs want to do the same, Themish said. “They’ve gone into business not just for the opportunity to achieve financial security for themselves and their employees but [because] they want something more. They want to leave something behind, a legacy—anything from fixing what’s wrong in a particular industry or revitalizing a local community or propping up those that do not have access to the resources they need for upward mobility. Regulation crowdfunding has the ability to be a revitalization tool.”