Two Social Entrepreneurs Built Equity Crowdfunding Site For Triple Bottom-Line Businesses Like Yours
This post was originally produced for Forbes.
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Michelle Thimesch, 55, CEO of Crowdfund Mainstreet and her business partner Jenny Kassan, both attorneys, have a track record of social entrepreneurship. They are passionate about reducing the funding disparities between male and female-led companies and between white and minority-led companies in America.
So, when Thimesch invited Kassan to join her in launching Crowdfund Mainstreet, a Regulation Crowdfunding platform governed by FINRA, it was an easy decision. Their mission is to help triple-bottom-line companies and small businesses, especially female-led and minority-led ones, raise the money they need to be successful.
Kassan, for her part, has a long history of working with female entrepreneurs to raise money from nontraditional sources, using whatever exemption from regulation made the most sense. Sometimes she helped entrepreneurs raise money under infrequently used exemptions like Regulation D 504, allowing issuers to raise money state-by-state from ordinary investors. Regulation Crowdfunding or Reg CF at it is commonly known, was implemented in 2016 after being written into law in 2012 during the middle of the Obama administration.
Thimesch, alongside her law practice, has been working as the executive director of East Bay Revitalization, an organization working to improve access to affordable housing and reducing unemployment.
Be sure to watch the full interview with Thimesch in the video player at the top of the article.
With their combined experience, launching a crowdfunding site for social entrepreneurs might well have been inevitable. Lynn Johnson, founder and CEO of Spotlight Girls, was there, she says when Thimesch asked Kassan to join her as the co-founder. “I have been cheering it on ever since,” Johnson says. Her company is now raising money on the platform.
Michelle Thimesch CREDIT: CROWDFUND MAINSTREET
Blake Jones, the managing member for Kachuwa Impact Fund which invested in Crowdfund Mainstreet, says he invested primarily because the business is “100% woman-owned and managed” and he supports the mission of helping other women entrepreneurs and entrepreneurs of color succeed with their mission-aligned enterprises. The fund has already invested in one of the companies raising money on the platform as well.
Some in the startup community have complained that Reg CF is too cumbersome and expensive to be an effective source of capital. For some, however, it may be the only affordable source of capital available. Thimesch says she is excited to bring the small business asset class to ordinary investors through the Crowdfund Mainstreet platform.
“As an impact entrepreneur who has experience raising money for an impact company that I co-founded in 2004, it is extremely challenging to do,” says Jones who is now an investor himself. He cites multiple reasons, “One of which is SEC regulations and another which is a series of systemic flaws in how entrepreneurs and start-ups connect with and raise money from angel investors, VC funds, and so on.”
Crowdfund Mainstreet doesn’t charge investors anything to invest and charges the issuing companies a modest 6.5% fee. Still, one of the primary challenges issuers face is the cost and administrative difficulty of obtaining a financial review, which is much more like an audit than its name would suggest. The cost can be many thousands of dollars.
In addition, issuers may need additional legal advice. Kassan continues her independent consulting practice and so far, all the Crowdfund Mainstreet clients are her clients.
Two issuers have successfully completed campaigns on the site. Kube Nice Cream, a vegan ice cream alternative manufacturer, raised $104,000 and RedHen Collective, “a feminist, worker-owned wine importer and wholesaler,” raised $79,000.
Johnson, who is raising money on Crowdfund Mainstreet, says, “Being part of CMS means being part of an actual community of support. There is a team of real people who are passionate about social enterprise, underserved entrepreneurs, the democratization of finance who are working very hard to help each venture be successful.”
Though the track record is short and the successes so far are modest, it is exciting for small business owners and social entrepreneurs to have a platform purpose-built for them.
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