Small Change Raises Money Via Wefunder

Eve Picker, CEO of the regulated real estate investment crowdfunding portal SmallChange.co, has put the shoe on the other foot. She’s raising money for Small Change on Wefunder. (Full disclosure: I’ve already committed funds to Small Change.)

Meet Small Change

“Small Change is a real estate crowdfunding portal, which means that we are registered with the SEC and members of FINRA, and we can use a pretty new securities rule called Regulation Crowdfunding, which permits anyone who’s 18 and over to invest,” Eve says.

“We focus on real estate projects with impact—with a mission,” she says. “Small change is amazing because we’re tackling projects that I think will make cities better in so many different ways.”

The impact goes beyond the obvious, she says:

What I love about what we've done and what's happened over the last couple of years is that not only are we supporting projects in disinvested neighborhoods and building net zero buildings and things like that, but we have had a groundswell of emerging developers come to us, and at this point, we have almost 60 percent of our developers or issuers are minority and or women, which I think is staggering given the very old white boy club that the real estate industry is.

The projects on Small Change are also profitable. “The projects that have gone full cycle that raise money with us have averaged about a 12 and a half percent internal rate of return, which is a great record,” Eve says.

Raising Capital on Wefunder

It seems odd for a company to raise capital with a business that could be considered a competitor. It feels a bit like a Chevy dealer selling brand-new Ford trucks.

Eve explains the regulatory environment that requires this practice. “The reason we’re raising money on Wefunder and not on our own platform is that under Regulation Crowdfunding, we can’t have an interest in any project that is on our platform.”

That prohibits a portal from offering shares on its owned portal. Small Change isn’t the first, nor will it be the last, to raise money using a competitor’s site.

Unlike crowdfunding sites like GoFundMe that collect donations, or sites like Kickstarter and Indiegogo that pre-sell creative content and other innovations, regulated investment crowdfunding sites sell investments. Many structures are used, from debt to equity, with hybrid solutions like convertible debt being common. Simple Agreements for Future Equity are often used, too.

Regardless of the instrument used, the entrepreneur or business raising money is issuing an instrument designed and intended to provide a financial return.

#ric #realestatecrowdfunding #impactcrowdfunding #crowdfunding #communitycapital
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