Get Ready for the March Impact Cherub Club Meeting
You Are Invited to Join the Impact Cherub Club
I’m not a financial advisor; nothing I write in Superpowers for Good should be considered investment advice. You should seek appropriate counsel before making investment decisions.
The Impact Cherub Club is an informal association of people who like to invest in impact via investment crowdfunding. Unlike crowdfunding on sites like GoFundMe, Kickstarter and Indiegogo, we’re making actual investments with an expectation that the companies we back will make an effort to return our invested capital with interest or appreciation.
Here’s why you should consider joining us:
It’s fun! We really do enjoy the process of gathering each month to share our thoughts about investing. We have a diverse group of people participating, and we’re building genuine friendships.
It’s smart. Deciding where to invest money in a sea of crowdfunding campaigns is challenging. Our process isn’t perfect, and I don’t anticipate we’ll get rich doing this, but I believe we’ll have more impact and make more money than if we were working individually.
It’s free. There is no cost to join the Club. We strive to operate the Club without any costs; neither the Club nor I ever touch the money folks invest—you invest your money following the wisdom of the Club if you choose to do so.
Over the past 14 months, we’ve decided to invest in 20 businesses, just over one per month. At the beginning of 2023, we decided to review fewer deals, so we’ll likely slow our pace of investing.
Together, we can have a bigger impact than working alone. Please join us.
Our next meeting will be held on March 21, 2023, at 1:00 PM Eastern. We look forward to having you join us. Register here.
February Meeting Report
Due Diligence Reports and Investment Decisions
At last month’s meeting, we heard diligence reports from club members on three companies, Pink Bench Distillery, HiveTracks and Von Perry. The club members discussed the pros and cons of investing and voted to reach consensus investment recommendations for the members.
We don’t announce our investment recommendations. If you’d like to know what we’re recommending, please join us on March 21 at 1:00 PM Eastern. There is no cost to participate; you don’t have to invest anything ever. When members choose to invest their own money directly in the companies we select, neither the Club nor I touch the money or earn any fees, commissions or favors.
New Company Screening
Last month, we took a first look at the following two companies. Club members volunteered to conduct some due diligence and report on all three at our next meeting on March 21, 2023, at 1:00 Eastern.
Seedsheet is a Shark Tank-featured company that sells patented organic gardening supplies. The primary product is a cloth sheet that rolls out onto a garden area with seeds implanted, ready to grow. The sheet serves as an organic deterrent to weeds. The company is raising money on Wefunder.
Between one and two billion people struggle with access to clean water. Aqua Research has developed an affordable and effective water purification process for people confronted with impure drinking water in low-income countries. The company believes the market for its products is $3 billion annually. The company is raising money via Netcapital.
At our meeting, I took a few minutes to discuss the importance of valuation for startup investing. We’ve previously discussed the mechanics of calculating pre-money and post-money valuation and what that means.
Startups are companies that are pre-revenue or in their first few years of generating revenue and therefore are expected to grow dramatically between now and the sale of the company. The return on investment comes entirely from an increase in the value of the business.
Suppose you’d like to double your investment over the next decade (venture capitalists target a tenfold return). In that case, the company’s valuation needs to more than double to allow it to raise more money and issue more shares.
For instance, if a company is raising money at a valuation of $10 million today, for your investment to double in value, the company would need to be worth more than $20 million.
In the future, the valuation will be less based on projections and more focused on history. To have a valuation of $20 million, the company may need to have $5 to $20 million in revenue, depending upon growth rate and profit margins. Do you think the company can do that? Investing your money is a vote of confidence in that outcome.
Note that if the company structures investment as debt, valuation has no bearing on the return. So, an investment in a local business that already has revenue—a local restaurant, food truck or other service business—and will pay you back out of cash flow doesn’t require an increase in valuation to deliver a return.
Valuation should be your primary focus when investing in equity in startups.
Of course, it almost goes without saying that when investing for impact, your focus on impact may cause you to invest in businesses with lower expectations of financial return. That is up to you.
Next Meeting—March 21, 2023, at 1:00 PM Eastern
At our next meeting on March 21, 2023, at 1:00 PM Eastern/10:00 AM Pacific, consistent with our plans for future sessions, the agenda will have three items:
Preliminary Consideration of New Candidate Investments
We’ll begin with the due diligence reports from the Impact Cherub Club members who volunteered to research the companies listed above under “New Company Screening.” After hearing the members’ reports, we’ll vote to determine whether or not to recommend investment in the companies. The decision will be made available to everyone who registers to attend, including those who don’t make it. Register here.
This month, I plan to demonstrate the entire process for investing in a Regulation Crowdfunding, FINRA-Registered portal. It is a bit trickier—but only a bit—than setting up an account with an ordinary online merchant. If all goes well, you’ll be more comfortable pulling the trigger after our session.
Preliminary Consideration of New Candidates
Before writing this post, I circulated a list of six candidate offerings to our members. From this list, they chose the following two for review. Each of the companies is raising money via Regulation Crowdfunding on FINRA-registered portals.
Raise Green is itself a FINRA-regulated crowdfunding portal. Founders Franz Hochstrasser and Jackie Logan are passionate about reversing climate change. They see the tremendous demand for capital for green technologies already scaling up and, with it, the opportunity to allow ordinary investors to participate in the economic benefits of investing. Raise Green is raising capital via Wefunder.
Zero Carbon, Inc.
Zero Carbon, Inc. is the U.S. affiliate of a German company that has developed a technology to produce hydrogen from waste. The process also yields fertilizer and bricks that can be used in construction. The company has connections to the Fraunhofer Institute (Germany’s MIT), and the German government has validated the technology. Zero Carbon is raising capital via Wefunder.
Please join us for the monthly Impact Cherub Club meeting on March 21 at 1:00 PM Eastern. There is no cost or obligation. We’re genuinely having fun! Register here for free.
On May 10-11, 2023, we’re convening the second annual SuperCrowd23 event. Building on the first event's success, we’re planning for bigger and better with lots of fun and excitement, along with great networking and so much invaluable content.
We’ll be making social impact microgrants of $100 to attendees chosen at random, enabling them to invest in one of the companies pitching at SuperCrowd23.
Currently, The Super Crowd, Inc. is offering tickets at early bird pricing. As a Superpowers for Good reader, you’re entitled to an additional 50 percent discount!
Don’t wait! Register now!
Friend and colleague Jenny Kassan is hosting training for social entrepreneurs hoping to raise $500,000 or more. She’s offering Superpowers for Good readers a 20 percent discount!