After having been introduced to the JOBS Act, Picker sought to circumvent the dilemma by launching Small Change, a limited liability company dedicated to making a positive difference in the communities in which it operates. The company matches investors with developers, undertaking what Picker refers to as “transformative real estate”—projects that bring about positive change based on a set of criteria the company refers to as the “Change Index.”
The Change Index is a proprietary scoring system that illustrates the impact its projects have on their surroundings. It uses data points, such as an area’s walk- and bike-ability, public-transit access, proximity to green space, availability of commercial and cultural amenities, and other measures of quality of life, to produce a composite score of 1 to 10 (10 being the best) to gauge the possibilities of a project.
Once a project has met the criteria, developers offer partnership positions in real-estate projects in return for investment made. Small Change acts as the intermediary, vetting the projects before offering them on the platform. Investments can be as small as $1,000 but vary from project-to-project.
For Picker, the platform is an ideal way for people who want to invest with a conscience—and she’s not alone. “I think there are a lot of people like me,” Picker says. “Even mutual funds are now clarifying what they invest in for people who don’t want to invest in shale oil or something like that. There are people who care enough about where their dollars go that they don’t want them to be put somewhere that’s not [in line with] the way they see the world.”
CrowdVested: Democratizing the Investment Stream
Unlike many crowdfunding platforms that are targeting SEC-accredited investors, companies like Atlanta-based CrowdVested are reaching out to the smaller fish in the pond, so to speak—the ones right in their backyard to be exact.
“We are trying to do something that is different than what most of the other markets are doing—and whether that’s the right position for us we will find out. We’re trying to open up the investment opportunity beyond the [typical] crowd of investors,” says Grady Thrasher, CEO and cofounder of CrowdVested. “Currently the vast majority of platforms out there are limited to selling to accredited investors only. Here in Georgia, we are a little bit unique in that the rules allow us to sell to unaccredited investors, but only if they’re from Georgia.”
Thrasher says there is a strong motive to invest locally in the same way people desire to support local businesses, local farmers, etc. To that end, CrowdVested’s online crowdfunding platform offers real-estate developers and project sponsors access to a large network of qualified investors in the state of Georgia only, offering an alternate funding source and working in conjunction with traditional financing sources to fill the gap between debt and equity funding.
“This is really a way to democratize that whole investment stream,” Thrasher asserts. He believes we are not far from a time when raising money through crowdfunding is as commonplace as going to a bank.
Thrasher muses: “To the extent that we are able to directly invest in the companies we believe in, instead of having to go through the bank or go through Wall Street, I think that is going to be a good day in our future—a day when we have truly reconnected with our neighbors and have reconnected with what’s going on around us instead of being isolated by all these middle men.”
More on Crowdfunding and the JOBS Act
Jumpstart Our Business Startup Act (JOBS)–H.R. 3606
Securities and Exchange Commission–JOBS Act Q&A
Small Business Administration–Introduction to Crowdfunding for Entrepreneurs (online course)