Return on Change

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Return on Change (RoC) is an equity crowdfunding platform that connects investors with innovative and socially conscious startups. [1] Return on Change works with startups that operate in five sectors, each of which touches on sustainability in some way: cleantech, edtech, life sciences, social enterprises, and technology. [2] An online equity crowdsourcing platform, RoC helps socially conscious ventures raise capital. [3]

Contents

History

Sang Lee, CEO and founder and native New Yorker, [3] founded Return on Change in 2012, in anticipation of the JOBS Act. [2] Lee became interested in the idea after working for six years as an investment banker in the power and energy sector and noticing the difficulties that startups in these industries faced when raising money from traditional sources. [4] He created Return on Change, which started helping startups sell equity to accredited investors, or those who make at least $200,000 a year and have $1 million in assets, in the summer of 2013. [5] The platform is among the first to take advantage of the Jumpstart Our Business Startups Act (JOBS), which passed in 2012. [6] In addition to his work at RoC, Sang is also the Executive Director of CF50, a global crowdfunding leadership think tank. [7]

Equity Crowdfunding

With the passage of the JOBS act, equity crowdfunding, which allows companies to sell equity shares through crowdfunding sites, became legal in 2012. [8] However, the SEC is still reviewing regulations that would allow non-accredited investors to make equity investments. [4]

Operations

Return on Change focuses on high-impact startups and is limited to accredited investors, or those who meet income thresholds according to SEC regulations. [2] RoC was a sponsor of the TechCrunch NYC Meetup and NY Tech Day. [6] The platform is currently preparing for the passage of new regulations that would allow non-accredited investors to participate. [9]

Milestones

In May 2014, cleantech startup Geostellar closed a $1 million round using the RoC platform. Geostellar is an online marketplace for financing and installing solar panels. [2] It is a solar marketplace that aims to map the solar power potential of every residence in the U.S., while demonstrating to homeowners their potential cost savings. [10] “Raising capital online since the JOBS Act makes it much easier to spread the word, get potential investors engaged and provide information,” David Levine, the CEO of Geostellar, said in the company’s announcement. [11]

Press Coverage

Return on Change has become a leader within crowdfunding discourse and has been featured in publications such as BetaBeat, Reuters, Ecopreneurist, and Crains. [1] Forbes wrote about the platform in August 2013. [4]

See also

Related Research Articles

Jumpstart Our Business Startups Act

The Jumpstart Our Business Startups Act, or JOBS Act, is a law intended to encourage funding of small businesses in the United States by easing many of the country's securities regulations. It passed with bipartisan support, and was signed into law by President Barack Obama on April 5, 2012. Title III, also known as the CROWDFUND Act, has drawn the most public attention because it creates a way for companies to use crowdfunding to issue securities, something that was not previously permitted. Title II went into effect on September 23, 2013. On October 30, 2015, the SEC adopted final rules allowing Title III equity crowdfunding. These rules went into effect on May 16, 2016. Other titles of the Act had previously become effective in the years since the Act's passage.

Crowdfunding is a process in which individuals or groups pool money and other resources to fund projects initiated by other people or organizations "without standard financial intermediaries." Crowdfunded projects may include creative works, products, nonprofit organizations, supporting entrepreneurship, businesses, or donations for a specific purpose. Crowdfunding usually takes place via an online portal that handles the financial transactions involved and may also provide services such as media hosting, social networking, and facilitating contact with contributors. It has increased since the passage of the Jumpstart Our Business Startups (JOBS) Act.

InvestedIn is a crowd funding website for fund raising projects and charity events such as walkathons and celebrity cause-based campaigns. InvestedIn is also a technology provider offering a white label crowdfunding platform for commercial and non-profit use.

Earlyshares

EarlyShares is an online platform for real estate fundraising and investing. It was founded in 2011 and is headquartered in Miami, Florida.

MicroVentures is an equity crowdfunding website offering investments in early stage companies. MicroVentures connects accredited investors with startups, businesses and services looking to raise funds or participate in select secondary market opportunities. It is the only major equity crowdfunding site that is a broker-dealer registered by the Financial Industry Regulatory Authority (FINRA) and the first to take a portfolio company to a successful exit. As of October 2013, MicroVentures had raised $20 million, spread among 45 companies including Twitter, Facebook, and Yelp.

AngelList

AngelList is a U.S. website for startups, angel investors, and job-seekers looking to work at startups. Created in 2010, the platform has a mission to democratize the investment process and to help startups with their challenges in fundraising and talent. It started as an online introduction board for tech startups that needed seed funding. Since 2015, the site allows startups to raise money from angel investors free of charge.

Confidentcrowd

Confidentcrowd was an equity crowdfunding portal based in Phoenix, Arizona. The company was associated with the Jumpstart Our Business Startups Act of 2012 and was identified as one of the earliest Crowdfunding portals launched in the United States after the JOBS Act made crowdfunding for equity permissible under US law. The company is also noted for its unusual crowdfunding approach which requires investment seekers to undergo screening by FINRA-licensed Broker-Dealers before they can access potential funding.

Mosaic is a solar fin-tech company based in Oakland, California. Founded in 2010, Mosaic created their initial business model using crowdfunding principals to offer loans for commercial solar development projects. For that reason, GigaOM referred to the company as "the Kickstarter for Solar". After shifting their model in 2014, Mosaic Inc. is now focused on financing residential solar projects by leveraging third party capital partners. Through this model, the company aims to democratize the social and environmental benefits of clean energy. Mosaic is a certified benefit corporation.

The crowdfunding exemption movement in the U.S. is the effort to exempt relatively small investment offerings, sold to the general public in small blocks, from the registration and compliance requirements demanded of large public companies. Inspired by the growth of non-investment crowdfunding, advocates see such exemptions as a way to spur innovation, economic activity, and small-business job creation, but opponents see such changes as invitations to fraud that will target unsophisticated investors. The movement has seen success with the passage of the Jumpstart Our Business Startups Act, which went into effect in 2016, and a growing number of state-level exemptions.

Wefunder is a crowdfunding service which connects startups with investors online. Wefunder uses a provision in the 2012 JOBS Act which allows unaccredited investors to purchase equity in early stage private companies.

EquityNet

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Junction is a San Francisco-based online investment platform that allows accredited investors to purchase limited partnership interests in funds that invest in major motion pictures. It differs from donation-based crowdfunding for film as members of Junction receive investments indirectly in the film projects rather than gifts, and the projects listed on Junction are already fully financed. Investors become limited partners in a fund that has economic exposure to the project through an investment agreement with one of the film's financiers.

Onevest, formerly Rock The Post, is an investment crowdfunding site for startups where entrepreneurs are able to raise capital from accredited investors. As of July 2014, startups launching on Onevest had collectively raised over $66 million.

Equity crowdfunding is the online offering of private company securities to a group of people for investment and therefore it is a part of the capital markets. Because equity crowdfunding involves investment into a commercial enterprise, it is often subject to securities and financial regulation. Equity crowdfunding is also referred to as crowd-investing, investment crowdfunding, or crowd equity.

Snapwire is a platform that allows users to take photos and videos in response to a request for brands, publishers, small businesses, and creatives who seek images that fulfill certain requirements that they set. Buyers post a creative image brief and photographers respond by submitting their photos through Snapwire website or mobile app. Winning photographers are awarded and paid. Aside from Requests, Snapwire regularly runs creative Challenges concerning popular image needs. Challenges are curated by Snapwire and are open to the public.

Alternative finance refers to financial channels, processes, and instruments that have emerged outside of the traditional finance system such as regulated banks and capital markets. Examples of alternative financing activities through 'online marketplaces' are reward-based crowdfunding, equity crowdfunding, revenue-based financing, online lenders, peer-to-peer consumer and business lending, and invoice trading third party payment platforms.

In the United States under the Securities Act of 1933, any offer to sell securities must either be registered with the United States Securities and Exchange Commission (SEC) or meet certain qualifications to exempt it from such registration. Regulation A contains rules providing exemptions from the registration requirements, allowing some companies to use equity crowdfunding to offer and sell their securities without having to register the securities with the SEC. Regulation A offerings are intended to make access to capital possible for small and medium-sized companies that could not otherwise bear the costs of a normal SEC registration and to allow nonaccredited investors to participate in the offering. The regulation is found under Title 17 of the Code of Federal Regulations, chapter 2, part 230. The legal citation is 17 C.F.R. §230.251 et seq.

Crowdfunding is the practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet. Crowdfunding is a form of crowdsourcing and alternative finance. In 2015, over US$34 billion was raised worldwide by crowdfunding.

Patch of Land is a peer-to-peer real estate crowdfunding online marketplace and hard money loan provider that connects real estate developers needing financing to lenders and real estate investors. Patch of Land focuses on 6–24 months real-estate first lien mortgage loans with borrower guarantees.

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References

  1. 1 2 Brian R Knight (2013-02-05). "Guess who's back? (An Interview with Sang Lee)". Crowdfund Insider. Retrieved 2014-06-26.
  2. 1 2 3 4 "Equity Crowdfunding Platform Return on Change Has Million-Dollar Baby". Xconomy. Retrieved 2014-06-26.
  3. 1 2 "The 5 P's of Social Entrepreneurship | Monika Mitchell". Huffingtonpost.com. 2013-10-11. Retrieved 2014-06-26.
  4. 1 2 3 Field, Anne (2013-08-25). "Raising Money For Startups-And Getting A Jump On The Government". Forbes. Retrieved 2014-06-26.
  5. ↑ Messina, Judy (2013-11-15). "Equity crowdfunding sites court investors, startups | Crain's New York Business". Crainsnewyork.com. Retrieved 2014-06-26.
  6. 1 2 "Tech Showcase: 10 Facts About Return on Change". Handshake20.com. 2012-05-25. Retrieved 2014-06-26.
  7. ↑ "Columbia Organization of Rising Entrepreneurs Return on Change: Power to the People » Columbia Organization of Rising Entrepreneurs". Coreatcu.com. 2013-12-05. Archived from the original on 2014-06-26. Retrieved 2014-06-26.
  8. ↑ Gabrielle Karol (2013-10-24). "SEC's New Crowdfunding Rules Explained | Fox Small Business Center". Smallbusiness.foxbusiness.com. Retrieved 2014-06-26.
  9. ↑ Messina, Judy (2013-11-15). "Equity crowdfunding sites court investors, startups | Crain's New York Business". Crainsnewyork.com. Retrieved 2014-06-26.
  10. ↑ Field, Anne (2014-04-30). "Online Solar Marketplace Raises $1M In Equity Crowdfunding". Forbes. Retrieved 2014-06-26.
  11. ↑ Weigley, Samuel (2014-05-02). "Crowdfund Effort By Geostellar Paying Off". Techli. Retrieved 2014-06-26.
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