Anyone Can Invest in Santa Cruz Startups
Santa Cruz Works and Sail Community Capital teamed up to create Community Speed Investing. In one hour you will hear a pitch from four Santa Cruz companies that are raising money through crowdfunding. Anyone can invest with a few clicks. Minimums range from $100 to $1,000
Think of this event as the Tinder of investing. Local angel investors Bud Colligan and G. Craig Vachon will ask some questions after each five-minute pitch and you will also have the opportunity to put our creative entrepreneurs on the hot seat.
If you have ever wanted to invest in startups, learn how the crowdfunding landscape has changed to support it. Community Speed Investing starts at 7pm on Thursday, December 10. Click here to grab a ticket.
What is crowdfunding?
Businesses at any stage can now raise up to $1,070,000 from anyone (accredited and unaccredited investors), as long as the raise is posted on a Securities and Exchange Commission-approved crowdfunding platform. Each entrepreneur has one year to complete the goal of the raise, otherwise, funds are returned to investors.
Each entrepreneur decides whether to offer debt (loan, profit share, or convertible note), or equity (SAFE agreement or stock options, with or without dividends), and also sets the terms of the offering and minimum investment. Funds can be used for any business purpose, including starting up, expansion, purchasing a business, or raising equity to release a larger bank loan. Reg CF can also be used to seed or top-off a larger round.
On November 2, the SEC released new rules for Reg CF, increasing the maximum a company can raise per year from $1.07M to $5M.
How much can I invest?
Today the average Jack or Jill can invest $2,200 on a 12-month basis or use the following SEC rules to determine if they can invest more.
If either an investor’s annual income or net worth is less than $107,000, then the investor’s investment limit is the greater of:
$2,200 or
5% of the lesser: the investor’s annual income or net worth.
If both annual income and net worth are equal to or more than $107,000, then the investor’s limit is 10% of the lesser of their annual income or net worth.
Confused? Here is a table from the SEC to help you.
Not to sow further confusion, but when the new CF rules go into effect, the $2,200 limit will be removed for unaccredited investors and you will be able to invest more based on your annual income or net worth. The SEC has yet to publish the specifics. When the new rules are in effect Sail's website will link to the SEC investor guide and will feature detailed Reg CF updates. They are expected to be law by March 1, 2021.
For accredited investors, aka angel investors: Today they can invest up to $107,000 per crowdfunding offering. When the new rules take effect the investment limit will be removed. Additionally, married couples can pool their finances to qualify as accredited investors.
Meet Four Local Startups
Their innovative solutions for creating affordable and below-market-rate housing in Santa Cruz is scalable to the Bay Area and beyond.
Invest: https://wefunder.com/new.way.homes
Parallel Flight Technologies
Their heavy-lift drone is the forklift of the skies, moving tools and supplies, and assisting firefighters across rough terrain.
Invest: https://www.startengine.com/parallel
Carnot Compression
Their patented solution reduces energy needs and cuts costs to produce oil-free compressed air—necessary for manufacturing, scientific research and more.
Invest: https://www.startengine.com/carnot-compression
Farmlink
They support the next generation of independent farmers and ranchers by linking them to land and financing, and emphasize sustainable practices.
Invest: https://www.californiafarmlink.org/farmlink-investment-notes/
A few reasons you should invest in Santa Cruz startups
First, local investing is an opportunity to vote with your dollars and democratize capital. You can choose to invest in a business that has a great idea and might be the next Uber, or could have a social impact—whether female-owned, minority-owned, sustainability-oriented, or is in line with your values in some way.
Second, and this part is really important, this is Santa Cruz’s opportunity to take a moonshot. If Santa Cruz County residents were to move just 1% of their investment portfolios from Wall Street to our home we would build ample capital to fund our startups and small businesses. This will lead to the creation of more local jobs, increase our tax base, and give our community the ability to bounce back faster after a recession.
Third, it’s really cool. Imagine if you could have invested in Looker or Cat & Cloud Coffee. You would brim with pride every time you rode past on your bike or grabbed a latte. Not to mention you would have made a sizable chunk of money when Looker was acquired by Google.
We hope you will join us in taking the first steps toward this moonshot.