Crowdfunding: Title III of the JOBS Act

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Blog by: Michelle Greenwood

 A Down to Earth Look at Title III of the JOBS Act

There is a natural tension between the character of place-based investing and the virtual world. But, almost from the beginning, the idea of serving our Slow Money beliefs through crowdfinancing was fundamental to our Slow Money SoCal approach.

As Slow Money SoCal founding members developing a local investment network in the early days, we were conscious of working against a very conservative legal backdrop. The legal environment coupled with a sprawling suburban Southern California setting, made the idea of crowdfinancing while serving the Slow Money Principles seem a legitimate expression of our Slow Money regional voice. Today, the recently signed Title III of the JOBs Act, if wisely implemented, can serve as further expression of our unique Southern California approach to local investing. The important thing, is not losing sight of our founding ideals.


Local Investing, Slow Money SoCal and Kiva

We’ve always been sensitive to how the virtual world both complements and runs counter to the Slow Money ideas. Kiva, the grandfather of all technology based crowdfinancing, sent representatives to the Slow Money SoCal network in late 2013. They wanted to share their story and encourage a partnership. At that point, nearly a year into our work, we had yet to find much success for an approach to local investing. Still concerned about the legal environment and the rules and regulations that inhibited local investing, we recognized the safe harbor Kiva offered with its zero percent and crowd financed loans. After some deliberation, we choose to partner with the nonprofit as one of its early U.S. trustees in their pilot program, Kiva Zip. We hoped the relationship would allow us to get our feet wet as we continued to develop our more grounded, place-based approach. Some of our members joined together to form the Local Investment Networking Club (LINC). LINC endorsed its first Kiva Zip loan in March 2014.


Creative Tension When You Add Crowdfunding

Though some of us found comfort in the Kiva partnership and its legal refuge, some of us thought the relationship was little more than distraction. If we were busy doing crowd raises on a technology platform that had lenders participating from all over the world, how could we be true to our Slow Money mission of growing a local economy from the ground up? How were these micro loans going to help us catalyze serious money to support our foodshed?

Personally, I sat somewhere in the middle. The idea of micro loans done in a virtual world did feel removed from the idea of community building in our local neighborhoods. Our goal was to create business dealings that considered financials, but emphasized values and relationships. We wanted transactions that came together through trust, character and the faith of a handshake. Crowdfinancing in the virtual world didn’t seem like the right way to build communities and empower our neighbors through local investing.

I haven’t entirely lost my concerns. I’m pleased, that since those early days, LINC has made great strides in developing its place-based fund local solutions. But I’ve also come to recognize and enjoy the opportunities that arise when you juxtapose the place-based and the virtual. The resulting creative tension.

As I’ve worked with Kiva as well as other platforms designed to bring together much needed capital for our Slow Money minded entrepreneurs, I’ve come to value how a wisely used virtual approach can complement the Slow Money vision. I’ve come to understand technology facilitated crowdfinancing as an important aspect of a larger investment ecosystem that works to include a variety of solutions all designed to engage and empower both local investor and neighborhood entrepreneur.


An Investment Ecosystem

Our Slow Money investment ecosystem includes equity, debt, royalty notes, subscriptions, prepaid accounts, among others. The crowdfinancing landscape is part of this environment. Crowdfinancing includes debt based financing through portals like Kiva or Community Sourced Capital; Peer to Peer (P2P) lending sites that allow lenders to earn a return; reward sites like Kickstarter or the sustainable, food-centric, Barnraiser; as well as sites that will accept donations only. The new crowdfinancing Title III law offers still another approach. A crowd based approach to capital structure through a technology portal makes participation in the financing of businesses accessible to both sophisticated investors and everyday folks.

So does a burgeoning Slow Money community built on friendships and shared values.


A Blended Approach for Neighborhood Impact

Through both Slow Money friendships and crowdfinancing technology portals, people can join in to influence the entrepreneurial landscape alongside or in place of the privileged, sophisticated investor. Both virtual and place-based approaches have their strengths. Technology portals can be easier to access. Face to Face (F2F) and Slow Money networks can be slow in building and slow in bringing together fund local opportunities. Due diligence can be daunting in both the virtual and the place-based worlds. The financial costs of filings and servicing fees for the entrepreneur on crowd funding portals may be expensive. But the human ‘cost’ and stretch of time resources may be an unsustainable expense in a place-based local investment network.

Outside of our Slow Money community, the unique strengths of both approaches have some professionals already looking toward a blended approach. Even some crowdfinancing experts are anticipating a possible future that will combine place-based groups alongside technology portals. These experts sense opportunity for a design through blending that allows for deeper, success enhancing networks.

With the work we’re doing today, Slow Money SoCal is well positioned to take advantage of this kind of future development.


Keeping Our Slow Money Values Front and Center

The heart of a Slow Money community is and always will be a local investment network that follows the Slow Money ideals. We believe in face to face transactions and building the social capital that comes from shared moments. We find such shared moments at Slow Money Gatherings and while frequenting the businesses owned by our neighbors. Social capital, the trust and character we come to appreciate in our members, keeps our Slow Money values front and center and the scale of our financial transactions appropriate for our neighborhoods. The financial instruments we are using and incubating to support our sustainably minded slow money businesses aren’t currently offered through the crowd portals and funding platforms. Royalty Notes and Demand Dividends are not currently available, though they may be in time. Technology platforms, lending, equity and otherwise, need to be kept in perspective. We need to add them as tools and support for the work we are doing through Slow Money as we continue to develop local economies designed to serve the health of our foodsheds and find ways to invest as if food, farms and fertility mattered.

Michelle Greenwood serves as Director of Investment Programs for Slow Money SoCal and was recently appointed for a six month position as a Kiva Zip Small Business Advisor. She resides in Dana Point, California and can be reached for questions about Slow Money, LINC, Kiva or local investing at


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