The equity crowdfunding market here in Minnesota is only going to be successful if we all work together. Recently, I called up Sandy Voigt, one of the many smart and talented folks who are enthusiastic about building a healthy market here in our state.
Sandy has worked in fundraising and nonprofits for years and now works with lending to small businesses with North Central Economic Development Association (NCEDA), the nonprofit affiliate of Region Five Development Commission (R5DC). We talked about how Sandy and her team are paving the way for equity crowdfunding in Minnesota.
Regional Development Commissions
There are nine Regional Development Commissions (RDC) in Minnesota, all operating since being established in 1969. What they do is provide technical assistance to the local units of government in their respective region. All of them operate a revolving loan fund for higher risk GAP funding. Region Five specifically has a micro loan program for pre-revenue companies - a kind of funding that is just a step above equity funding.
All the the RDCs work with federal partners like the Economic Development Administration (EDA) and the United States Department of Agriculture (USDA) to achieve their local goal to create quality jobs in rural Minnesota. They work on a broad range of initiatives. Some of the previous focus areas have been aging and the arts. Region Five's current focus is community and economic development in addition to transportation planning that includes creating safe routes to schools so kids can be active on their way to learn.
Region Five leadership has worked with MNvest.org from the very beginning to garner the legislative support to pass the "MNvest" law, a SEC Regulation state exemption to allow businesses to sell stock over the internet, AKA "equity crowdfunding." Watch a video about equity crowdfunding at the bottom of this blog post.
The "MNvest" law allowing intrastate equity crowdfunding in Minnesota went into effect in June 2016. Now that the law is passed, there is one big concern: understanding equity crowdfunding is kind of complicated.
So, Region Five shifted their focus. After a short time considering being a MNvest portal operator themselves, it was decided there is a greater, immediate need to educate people about what the heck equity crowdfunding actually is. When it comes to crowdfunding, the Region Five Regional Development Commission is focused on educating economic development professionals to interpret this new funding opportunity while working with local businesses owners to map out their options.
The Region Five team is taking all their research and experience helping develop the law and garner legislative support and using it to create content to help us all understand it better. They've even spent time with portal operators in other states to get to know their experiences that might help Minnesota build a healthy equity crowdfunding ecosystem. With all this knowledge, they've developed videos and shareable PDFs to help small business development centers get to know the Who, What, Where, When & How's of MNvest campaigns.
So, Here's The Question
Why is a five county region in North Central Minnesota doing all of this?
You might not be surprised to learn that there are a LOT of business resources in Minnesota. There's even a lot of access to Venture Capital funding, especially in the Twin Cities. But that's just it, rural Minnesotans don't really have as much access to VC funding as the businesses that operate near the Twin Cities. Region Five is focused on creating opportunities for rural Minnesotans and equity crowdfunding is available to anyone with an internet connection.
Any Minnesotan with an internet connection can raise money for their business or invest in a business looking to raise capital. Funding campaigns can be found on any of the state registered portals, which are scheduled to launch "soon."
Until then, you can watch Sandy in this video explaining equity crowdfunding. Learn more about Region Five Development Commission at their website, here. Learn more about the North Central Economic Development Association at their website, here.