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5 Quick Things Social Entrepreneurs Should Know About SEC’s New Equity Crowdfunding Rules

Well, it happened. This guy innovated a crazy awesome Aladdin magic carpet for Halloween.

And, the Securities and Exchange Commission (SEC) finally passed rules for online crowdfunding for investment (“equity crowdfunding”) on October 30, 2015.

Why does this matter for social entrepreneurs?

So, let’s say you are a social entrepreneur. You are creating tons of meaningful impact through your startup and have a business model that is starting to work. How are you going to scale? You may have pitched to dozens (if not more) investors. Maybe they like your idea and your impact, but if your experience is anything typical, you have amassed more rejections than a kid collects candy on a good Halloween night trick-or-treat run. What are your options?

Since its rise to popularity, crowdfunding has been a formidable option for social entrepreneurs raising early-stage funds. Why? It lets you build an audience, support, and outreach as you raise funds. Best of all, you get to appeal to people who can vote with their dollars. They can ‘invest’ in your idea because they believe in you and what you are doing; they are not restricted by the same demands for return on investment that VC’s or even impact investors may be bound by.

But up until know, this kind of crowdfunding was based on donation. It has been your good word or promise to deliver something amazing that your crowdfunders depend on. And, while they “invest” using popular crowdfunding sites such as Kickstarter or Indiegogo, there hasn’t really been a chance for them to receive a return on their investment beyond what you promised.  They donate to support you and to receive first access to your game, book, product, or service.

It has been a bit more complicated (but not impossible) to set up equity crowdfunding. State tools such as Direct Public Offerings (DPO’s) have provided these pathways. But they have restrictions on where your investors can be located in order to invest in your campaign—i.e. they are bound by state law and scope.

And, though the JOBS Act with its equity crowdfunding provision, passed in 2012….the SEC hadn’t found the right way to formulate rules to both allow any US citizen to invest in startups, and to protect said citizens from fraud, deceptive, or unscrupulous practices by said startups.

Until last week. That’s when the SEC passed rules that attempt to satisfy both the buoyancy of democratizing early-stage investment and the concern of protecting the tomorrow’s new early-stage investor, i.e. you and me.

This matters for social entrepreneurs because this democratization of investment into startups has the potential to change the game for good ideas and meaningful impact. Social entrepreneurs who meet all of of the SEC requirements, can appeal to people and not just investment and impact investment firms to raise funds. They can validate and scale businesses at a pace set by the social enterprises, without necessarily trying to be tomorrow’s unicorn or polka-dotted zebra.

 

5 Quick Things Social Entrepreneurs Should Know About SEC’s New Equity Crowdfunding Rules

So, what are a few quick things every social entrepreneurs should know about these new rules? Here is the one-minute primer.

1. One million dollars in 12 months. Startups can raise up to $1M through online equity crowdfunding from unaccredited investors, in a 12-month period.

2. 5% or $2K for the under $100K club. Aspiring crowdfunding investors making less than $100K can commit 5% or a maximum of $2K toward equity crowdfunding, within one year. For the those making $100K or beyond, the limit is 10% or $100K, also within a year.

3. Newbie audit exemption.  first-time equity crowdfunding issuers are exempted from the requirement for a financial audit (costly!) prior to raising equity crowdfunding fund

4. Raising $500K – $1M. Startups looking for less than $500K funding in online equity crowdfunding can provide tax returns that have been “reviewed” by an independent tax accountant. This is also true for first-time equity crowdfunding companies raising between $500K-1M.

5. Yup, there are more questions than answers. Have more questions? Join the club (and the crowd )! The best thing to do now is to stay informed as new crowdfunding platforms appear, and existing crowdfunding platforms pivot to make room for this new way to invest. For social entrepreneurs, though there are so many questions still in the air, the big thing doesn’t change: crowdfunding works best when it is backed by integrity. For every hardworking, mission driven social entrepreneur trying to stake a claim, there might be a few others who are “greenwashing” their way to online equity crowdfunding investment. Stay above the fray and and make good choices about whether your startup is in a good position to have ROI-seeking investors, how you measure impact, and whether taking on equity-funding might hamper, impede, or otherwise negatively impact your drive and focus to create positive impact. It’s an exciting time, for sure! But a few wayward examples, and this potential boon for social entrepreneurs could take turn for bust.

 

Read more

  • SEC: SEC Adopts Rules to Permit Crowdfunding
  • Entrepreneur: The SEC Just Approved Rules Opening Up Equity Crowdfunding to the General Public In a 3-1 Vote
  • New York Times:  S.E.C. Gives Small Investors Access to Equity Crowdfunding
  • Gizmodo: The SEC Just Made a Big Change To What’s Legal In Crowdfunding
  • Equities.com: Rapid Reactions to SEC’s Approval of Title III Crowdfunding Rules
  • Entrepreneur: What the New Equity Crowdfunding Rules Mean for Entrepreneurs
  • FinanceMagnates: SEC Passes Crowdfunding Rules: ‘Investing Will Be Forever Changed’
  • Huffington Post Business: US SEC Votes YES to Equity Crowdfunding Today, More Than 1300 Days After 2012 Law and 80 Years After 1933 Law
  • Wikipedia: Crowdfunding exemption movement
  • Wikipedia: Equity Crowdfunding (US)
  • Innov8social: What is Crowdfunding?
  • Innov8social: What are 3 Crowdfunding Options for Social Entrepreneurs?

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Direct Public Offerings (DPO) – Upsides, Risks, and Use Cases

Internet crowdfunding & DPO - raising funds from individual investors online
The Direct Public Offering  (aka investment crowdfunding) is a fascinating concept and unique way for certain businesses to raise funds.For example, it is increasingly being championed by small businesses and social enterprises, which aren’t always ideal candidates for traditional funding such as venture capital and loans.But, what are the risks of DPO’s? The upsides? And which companies have actually gone the DPO route?

In an effort to curate and organize published content related to DPO’s, we have taken excerpts from a broad range of articles on DPO’s and arranged by topic to help social entrepreneurs research this intriguing and growing funding option.

Definitions

From “What is a Direct Public Offering a.k.a. Investment Crowdfunding? (Cutting Edge Capital)

Direct Public Offering (DPO) (also known as Investment Crowdfunding) is a generic term that includes any offer and sale of an investment opportunity to the public in which anyone (both wealthy and non-wealthy) can invest. Also, the entity that is raising the funds offers the investment directly, without a middleman like an investment bank.



From “What is a Direct Public Offering? Going Public Attorneys” (Securitieslawyer101.com)

A Direct Public Offering allows a company to sell its shares directly to investors without the use of an underwriter. With a Direct Public Offering, the company files a registration statement with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended (the “Securities Act”).

Typically, in going public transaction Form S-1 (”S-1”) registration statements are used.

From “Social Enterprises Raise Money Through Direct Public Offerings” (Forbes, 8/6/2014)

Andy Bamber, Cutting Edge Capital’s business development manager, calls [Direct Public Offerings] “securities-based crowdfunding.” Through DPOs, companies sell securities directly to a lot of unaccredited investors. It’s a way to raise capital without all the regulations, underwriting and expense required for a regular IPO. In some cases, there’s a cap of $1 million; in others, there’s no cap.

From “Social Enterprises Raise Money Through Direct Public Offerings” (Forbes, 8/6/2014)

While they’ve been around for a long time, DPOs have flown largely under the radar—until now. One reason could relate to the JOBS Act. Although DPOs aren’t regulated by that legislation, the pace of the law’s implementation could be one factor in the stepped-up interest. “I think DPOs are getting a boost from the continued regulatory delays of investment crowdfunding,” says Amy Cortese, author of Locavesting: The Revolution in Local Investing and an authority on the subject of local investing. “It’s a form of crowdfunding that’s legal today.”

This is good news for social enterprises, because DPOs are useful for ventures “with a strong following or appealing social mission,” says Cortese. (That includes businesses that are of interest to investors and consumers looking to support local ventures, as well as many social enterprises).

From “Entrepreneurs- Have You Considered Direct Public Offerings To Raise Capital?” (Return on Change, 1/29/2014)

DPOs allow community members to invest in local business, allowing public offerings of securities (stock, notes, or any other kind of investment) to all investors, wealthy or not.

DPOs are different from IPOs in that they allow business owners to sell stock directly to the public without the registration and reporting requirements of an IPO. However, they must be filed with the individual states and are screened by state-level securities regulators who have a great deal of experience at spotting fraud and overly risky propositions. That is a big advantage over the JOBS Act, which prohibits state securities regulators from getting involved. Vetting by such regulators reduces the need for onerous limits like those imposed under the JOBS Act.

Generally, DPOs do not require audited or reviewed financials, caps on total amount raised or individual investments, ongoing reporting or limitations on communications. There are maximum limits on the amount that can be raised, usually up to $1 million, but this can be flexible.

A major feature of DPOs is that business owners are permitted to advertise and promote to potential investors. There is a downside. DPOs stocks can be harder to sell when investors are ready. This can be a deterrent for investors.

From “Direct Public Offering (DPO): Expanding Your Team of Stakeholders” (California Bank & Trust)

Here’s the process for the creation of a DPO – an ideal capital development tool for many growing businesses:

  • Stock is registered with state administrators instead of with the Securities and Exchange Commission (SEC).
  • The company generates a prospectus that clearly lays out company financials, fiscal history and reasonable projections for further growth. There are regulations that must be followed in the preparation of a DPO prospectus, so hiring legal counsel to help develop your DPO prospectus is just plain smart business.
  • The company makes financial reports and documents publicly available.
  • The company provides accurate and timely information about the business to investor-shareholders, usually on a quarterly basis.
  • The company is audited by an accredited, independent accounting firm, which means your books must be current, clear and down to the penny so auditors give your business the “thumbs up.”

…

Types of Direct Public Offerings

A DPO falls into one of three regulatory classes:

  • Regulation D: The most widely known form of DPO, a Regulation D, also called a Small Corporate Offering Registration (SCOR), equips you to raise up to one million dollars every 12 months. Shares are registered with your state’s securities regulatory administration.
  • Regulation A: Enables your company to raise up to five million dollars annually. However, a Reg A DPO requires registration with the Securities and Exchange Commission’s Small Business Office. This increases the costs of compliance and reporting. In addition, it adds another agency looking over your shoulder every 90 days.
  • Intrastate DPO: This class of DPO isn’t capped on allowable sale of stock but you must raise funds within your state, be incorporated in that state and do at least 80% of your business in that state, hence the term “intrastate” DPO.
  • This type of DPO is ideal for growing businesses with a clearly-defined, regional service area. Planning on going global? An intrastate DPO is not the way to grow.

The Upside

From “Direct Public Offering (DPO): Expanding Your Team of Stakeholders” (California Bank & Trust)

  • Stock sales raise capital you are not required to pay back, as you would a commercial loan. Investors accept and share both risk and reward generated by your business.
  • Because DPO investment capital isn’t a loan, you don’t make interest or principal payments on the funds you receive. Investors grow wealth through appreciation of share price.
  • Selling shares of stock through a DPO won’t require your company to give up as much equity as it would using venture capital (VC) investors. A DPO keeps greater control of the company in your team’s hands.
  • Marketing shares of stock simultaneously “sells” your company brand to customers, clients, vendors, contractors, subs, suppliers and others with whom you conduct business regularly.
  • Since the legal and accounting requirements for a DPO are relatively simple, a DPO measures investor interest – a critical metric when you decide to take the company public.
  • Employees, customers and suppliers who purchase an ownership stake in the company have a vested interest in seeing your company succeed. You expand the team outside the four walls of your facility.
  • Capital loans are easier to obtain when lenders recognize that investors participate in risks faced by the company. This enables you to leverage the good name of your business to raise more capital at better rates and terms.

 

The Risks

From “Seeking Capital, Some Companies Turn to ‘Do-It-Yourself I.P.O.’s’” (New York Times, 7/31/2013)

On the downside, business owners must be prepared to invest a substantial amount of time and effort in the process and to deal with hundreds or even thousands of small investors. And most direct offerings require assistance from a knowledgeable lawyer. Not surprisingly, however, cutting out the middleman and streamlining the process lowers the cost considerably. A direct offering might cost around $25,000 in legal fees, while a formal initial public offering can cost $1 million or more. That makes direct offerings an increasingly attractive option for companies that need a substantial amount of capital — typically between $500,000 and $5 million — but not enough to justify the cost of an initial public offering.

From “An IPO route for the little guy, but full of risks” (CNBC, 12/4/2014)

“Almost 100 percent of entrepreneurs grossly underestimate how tough it is to get financing from third-party investors, even when they’re selling shares,” said Voskuil, adding, “Where do you find investors willing to put $10,000 or $25,000 of capital into your company without the help of a financial professional’s access to deal flow?”

Voskuil said any company pursuing a DPO on its own that reaches even one-third of its target amount is doing well.

This year, Cutting Edge Capital has worked with more than 40 companies to launch DPOs, and it expects to double that number in 2015. It doesn’t come cheap, though: Cutting Edge Capital charges $14,000 for its DPO boot camp.

 
From “The Ups and Downs of Internet Direct Public Offerings” (Virtual Advisor, 2000)

The Downsides of Internet DPOs

According to Brad Sinrod, president and chief executive of Philadelphia-based IPO.com, DPOs are often not all that they’re cracked up to be. In Sinrod’s experience, he has found that many early-stage growth companies are not ready for the scrutiny of a public offering, let alone the responsibilities that go along with conducting a DPO. “An entrepreneur may do a good job of building their business, but may not be able to play the role of securities lawyer, investment banker, stockbroker and investor relations professional — all of whom you’d normally include in a full-blown public offering,” Sinrod explains. In fact, Sinrod, whose company reports on the IPO market, says a small- to mid-sized firm should rely on sources like friends and family for start-up funding.

If firms do undertake a “do it yourself” DPO, Sinrod advises working with professionals who will truly assist in the offering process. “[Not only do they] bring experience to the table, but investors are much more comfortable when professionals are involved,” he says. “Investors feel that there are actually professionals involved who have done some due diligence – because an investment bank or a broker/dealer needs to do due diligence and take liability for the companies they raise money for. There’s also a better chance that the stock will be priced at fair market value. We’ve seen a lot of entrepreneurs who think their garage-based business is worth $100 million, and they may be correct, but they need to go through the normal process to determine the true value of the company.”

Sinrod adds that one primary reason that companies go public is to possess a publicly traded security that provides liquidity for investors and a potential exit strategy for investors. “Unless a company is working with professionals with experience in the process, it’s not an easy task to accomplish,” he advises. “There have been a few companies that have done DPOs with some success, but any company that can find an investment bank should.”

 

Use Cases

 

From “Can a DPO grow your business like Ben & Jerry’s?” (Greenbiz, 6/16/2014)

Ben & Jerry’s, Annie’s Homegrown and Real Goods are examples of social enterprises that have used DPOs to raise capital.
…

So far, Cutting Edge has completed 10 DPOs, raising nearly $5 million, with 20 or more in the pipeline. Arroyo Food Co-op, Calvert Foundation, Farm Fresh to You, People’s Community Market and RSF Social Finance are among those that have listed DPOs there.

Right now, the platform is only available to California residents and the minimum investment is $1,000.

 

Most famously, in 1984, two young entrepreneurs raised a first round of capital for their fledgling ice cream company in an intrastate offering. With the slogan “Get a scoop of the action,” Ben & Jerry’s raised $750,000 from 1,800 ice-cream-loving Vermonters, allowing them to build a new plant and expand, and setting the stage for a $5.8 million initial offering the following year.

Annie’s Homegrown, the maker of packaged macaroni and cheese, raised $3 million in 1996 through a direct offering, advertising the offering in coupons tucked into each box. And more recently, tight credit markets and the rise of social media have fueled interest in the alternative financing system, especially among companies that have enthusiastic customers who can be converted into shareholders.

 

From “Social Enterprises Raise Money Through Direct Public Offerings” (Forbes, 8/6/2014)

Consider Cutting Edge Capital. Launched four years ago, the Oakland, CA,-based company is really hitting its stride. It has facilitated 11 DPOs, raising just over $5 million–with 25 in the pipeline.
…

People’s Community Market, for example, which is trying to build a full-service grocery store in Oakland, raised $1.2 million in a DPO in 2013. (The offering is still open, though the enterprise isn’t doing any more active outreach, according to Brahm Ahmadi, CEO and president). Because it had already been trying to get established for a number of years, “A lot of people knew us and what we were doing,” says Ahmadi. “A DPO seemed like a good fit.”

As an example, Arroyo Food Co-op, a startup cooperative grocery store in California, is using a DPO to raise money from its community to open. The co-op is offering loans that pay a competitive rate of return. Because Arroyo registered the offering with the California securities regulators, there is no cap on the amount it can accept from each investor and it was not required to provide audited or reviewed financials. Arroyo currently has 660 members and has raised $200,000 in member-owned loans. Other successful examples include People’s Community Market, Real Pickles, and Quimper Mercantile.

From “Direct Public Offerings: Allowing the Community to Invest” (Triple Pundit, 1/22/2013)

Another company working with Cutting Edge Capital to raise capital through a DPO is Farm Fresh To You. Farm Fresh To You, a Bay Area produce home delivery service and also a farm, sought capital through accredited investors as well. They found about $1M over five years but wanted to find a way to include their customers in their financial development. Yet 99 percent of their customers were non-accredited investors. They asked their lawyers how to get their customers involved and they shrugged their shoulders. In came the support from Cutting Edge Capital and in five months, Farm Fresh To You’s Marketing and Sales Manager, Noah Barnes and Jenny Kassan set up a DPO. According to Barnes, “It was a win-win. They get better than market rate on their investment and they can get more fresh produce from us.” Farm Fresh To You can even pay the interest back with produce credits through their Green Loan Program.

From “Raising Cash via Direct Public Offering” (Entrepreneurship.org, 2006)

Adamis could have gone the venture capital route. But venture capitalists pay less per share in return for the five-to-eight years they typically wait for potential return on a high-risk investment. That, in turn, would have required us to sell many more shares to get the money we need.

In the past year, this environment has led many companies, including Adamis, to explore various financing options known as alternative public offerings (APOs), such as reverse mergers. In a reverse merger scenario, we would acquire a public shell, e.g., a publicly traded company that is no longer a functioning business. This would save time and effort to register with the U.S. Securities Exchange Commission (SEC) and deliver a shareholder base and publicly tradable stock.

However, public shells are quite expensive. In addition to legal and accounting fees, people who control a “clean shell” with few liabilities generally demand ownership of five to ten percent of outstanding shares plus cash ranging from $250,000 to $750,000.

Based on our “make-versus-buy” analysis, we chose to raise public money by creating our own shell through direct registration (also known as a direct public offering) with the SEC.

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What Are 3 Crowdfunding Options for Social Entrepreneurs?

crowd
There is incredible power and potential in the crowd, especially for social entrepreneurs.My experience in crowdfunding is proof, and has provided new perspective on options in the space, and pros and cons of various forms of crowdfunding.Additionally, this past week, Jenny Kassan of Cutting Edge Capital presented a webinar on crowdfunding options for small businesses—her firm specializes in an emerging equity crowdfunding form called “direct public offering”.

Here are a few broad highlights from Jenny’s webinar, along with my own research and perspective.

 

What Are 3 Crowdfunding Options for Social Entrepreneurs?

 

1) Crowdfunding for donation (aka perks-based, donation-based crowdfunding)Key Features:

  • Anyone can provide funding for a campaign
  • The contribution is a “donation”, often rewarded with perks or benefits—but not equity
  • No financial return for contributors
Pros:

  • Easiest to set up (i.e. no legal requirements)
  • Anyone can contribute from anywhere
  • No limit to the number of funders or amount of funding requested
  • Direct appeal to customers, friends, and family for small to mid range amounts
  • Social entrepreneurs can deliver value through non-monetary perks (i.e. can find ways to create value for the funder, without prohibitive cost to the social enterprise)
  • Can build community, marketing, branding in addition to raising funds
  • Can serves as a way to test out an idea, concept, features, or pricing by getting customer feedback through interaction with the campaign, comments, orders, etc.
  • Can validate concept and attract other forms of funding (i.e. venture capital, impact investment, angel funding, friends & family, etc.)

Cons:

  • Though not often the case for social entrepreneurs, could create backlash for businesses (i.e. for-profit business asking for donations could raise eyebrows). For an interesting take and experience on that, see the TED Talk by Amanda Palmer (also embedded at the bottom of this post.)
  • Can be time-consuming and resource-intensive, especially for larger asks (requiring marketing budget, high touch points for those launching, and involvement on various social media platforms and engagement tools)
  • Is based on goodwill, so if the project changes significantly—it may mean reaching out to numerous stakeholders to inform (and potentially refund)
  • Some platforms require raising all requested funds, or none of the funds are released
  • The platform will take a percentage of the funding raised

Examples: Kickstarter, Indiegogo, StartSomeGood, Crowdrise



2) Crowdfunding by accredited investors under Rule 506(c), authorized by JOBS Act 2012.Rule 506(c) was adopted by the Securities and Exchange Commission in 2014. It essentially allows businesses to raise unlimited funds but only by accredited investors. Under the federal definition, accredited investors are individuals who have a net worth of $1M (excluding their primary residences), or earn more than $200,000 as annual income (for past two years, and expected in current year) or $300,000 annual joint income for spouses. Entities can be accredited investors if they are valued at $5M or greater.Key Features

  • Only accredited investors can invest in a company online
  • A financial return is expected
Pros
  • Can potentially raise an unlimited amount of funding from high net-worth individuals
  • Is a way to attract investors without commitment of traditional, larger initial investments
  • Is a newer form of investment, so may attract different kinds of accredited investors
  • Connects and incentives wealthy, and often well-connected, donors (i.e. accredited investors) to engage and help your social enterprise succeed
Cons
  • Limited to the pool of accredited investors (The SEC has estimated that 7.4% of US households qualified as passing the threshold for being “accredited investors” (an estimated 8.7M households in 2010)— this leaves out over 90% of households across the US alone
  • Newer form of investment, so accredited investors are less familiar (and potentially less comfortable) with this option
  • Requires an attorney and legal formalities

Examples: CircleUp, Wefunder, Launcht



Important Note: The other provision of the JOBS Act that would allow equity investments by non-accredited investors (which we have written about here and here), has not come into effect. The SEC has not yet adopted specific rules around this type of equity crowdfunding investment. Attorney Joe Wallin has an excellent blog post on this titled “Crowdfunding v. Rule 506(c) Offerings”

3) Direct Public Offering (aka investment-crowdfunding, crowdfinance) Key Features:

  • Can offer investment opportunity to anyone
  • Non-accredited investors can participate
  • Financial return is expected

Pros

  • Any type of organization or company (nonprofit or for-profit) can invest for equity
  • Direct investment (no middleman)
  • Can offer any kind of investment (i.e. equity, debt, revenue-based investment contracts, pre-sales, for perks)
  • Is a new form of investment crowdfunding– social enterprises can be ‘first to market’ in raising funds for your cause/in your market
  • Can replace an angel round or Series A round (i.e. past DPO’s have raised upwards of $500K, $1.2M, even $2M)
  • Can build broader community, marketing, and branding while fundraising
  • Can engage in multiple rounds (i.e. is like a ‘faucet’, can be turned on and off)

Cons

  • Newer form—fewer people know/are familiar
  • Requires state registrations (which could mean more paperwork if raising funds across states) and legal formalities
  • Can take 4-8 weeks for paperwork and legal compliance before launching DPO
  • Founders may need to manage relationships with numerous investors
  • Resource intensive and may require professional marketing and media services

Example: CuttingEdgeX

 

Read More

 

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2013 Summer in Review: Book, Crowdfunding, and Design [PHOTOS]

As we begin to notice a familiar crispness in the air—the characteristic calling card of fall, it seems like the right time to reflect on the summer and what is ahead. The bundle of traditionally warm months was momentous in a number of ways for Innov8Social and for my connection with the social innovation movement.

Explorer to Contributor

In a number of ways, the summer signified a move from explorer to contributor. The past two years have been a humble exploration of social innovation through covering events, interviews, trying out new types of content on the blog, and connecting with thinkers in the field. And now there is a new pull and push to create something useful, valuable and accessible.
The urge manifested in a campaign to write a book to map and guide a broader audience through social innovation and emerging best practices. Meeting Shivani gave the project wings to soar higher and with better vantage points, and our decision to crowdfund the book on Indiegogo gave us an automatic litmus test to validate our idea.

The Book, Beyond Crowdfunding

In the month since the campaign ended, we have been transitioning from ‘fundraising mode’ to ‘author prep’ mode. Shivani has been traveling to Africa and South Asia for a social enterprise consulting assignment—forcing our hand in creative, innovative remote collaboration. Just before her latest trip we met, outlined on Google docs (using an Apple TV and LCD to project and edit our outlining document on the big screen) and pitched each other chapter headings, workflows, and headlining organizations to interview and feature.
Where much of my work has focused on social innovators with a “Silicon Valley” mindset—utilizing tech, considering scale, and concerned with issues such as formation, funding, and business models—Shivani continually challenged and pushed my ideas of social innovation with what she has seen, heard, and read about of vital work happening abroad.
As she embarked on her latest trip to Bangladesh, we devised an intense reading list for each other featuring works ranging from Stanford Social Innovation Review to Jugaad.  As with any project—having been at this one for the past few months together—we now have a better idea of timeline. We know a few things: 1) we will have to write the book together, at the same time (remote writing will inhibit the collaboration process and writing chapters separately could create disparate voices and perspectives) and 2) we are focused on quality first and timeline second.  What that means for you: it may be better to think of this book as one for the new year rather than a holiday gift!

Hearting Design

 

Another element that wove itself into summer was design. I participated with a team in the first ever Human Centered Design for Social Innovation online course by +Acumen and IDEO.org. It was illuminating in a number of ways and has made me more aware of design—i.e. considering the end-user and whether the design really meets the need and use, and what (if anything) would be a better fit.
The process underscored my love for design. I also re-designed my business cards (using half-cards plus photos I took and edited) and am working with GoodJoe to launch a design contest re-envision the Innov8Social logo. More to come!

Photo Essay

As you may suspect from my posts here and on Flickr, I have an amateur’s fascination with photography. Here are a few photos from random, compelling events from the summer. Enjoy!
small airplane propellers

 

cappuccino dove peace
human-centered design for social innovation
Japanese garden
japanese garden
recycled, reused, repurposed
classic cars in downtown
kids at play in summer
golden gate bridge
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Crowdfunding and Beyond

Tomorrow will be mark a week since we concluded our Indiegogo campaign to fundraise for our social innovation book project.

How did it go?

Thanks to your efforts, we successfully raised (and exceeded) our goal of $7100. Co-author Shivani Khanna was catching a flight to Africa on the day before the crowdfunding campaign concluded. We caught each other just as she boarded the plane and wished each other (and the book project) the best as it headed into its final sprint.

Sunset, Sunrise

We acknowledged that either way, we were heading into a new phase of the book project. What started as a personal goal, morphed to a partnership, became an active project (complete with shared documents, expansive spreadsheets, and a talented videographer), had become a public project. And now, for the next few weeks it would descend back into the deep waters of quiet as we both respectively gather knowledge, perspective, and negotiate distance as we continue working on the project.

Shivani heads abroad on consulting assignment which will bring her in direct contact with social enterprises, officials, and constituents at the forefront of initiatives to provide financial services to the base of the pyramid.

While we are in touch through the means available, much of our exploration and knowledge gathering over the next few weeks will happen independently. The sun setting on our crowdfunding campaign only means an upcoming sunrise for the next phase.

Reading again

Though a voracious reader growing up, since attending law school books have taken a backseat to different deliveries of information such as blogs, podcasts, and documentaries. To transition back into book-reading mode, I have set a personal challenge to read 10-15 books over the next 4-6 weeks. Additionally, there are a number of very exciting interviews that will be posted to Innov8Social which will serve to simultaneously deepen and broaden the conversation on social innovation.

To you

Though we have written a number of love letters to you all, our supporters (including the one below sent out to all of the contributors), it deserves mention again here. From a firsthand view there is something very real and humbling about a crowdfunding campaign. For weeks, days, hours, seconds as you refresh the campaign page and wonder. How will reach our goal.

For us, once the first supporters logged in their contributions we knew one thing for sure—this book was happening.

You have carried the race to this point, and handed the baton back to us. We look forward to digging deep and finishing strong.  For the encouragement and opportunity to create this resource, we express our heartfelt gratitude.

 

Posted from our Indiegogo page updates

 

Together, we did it!
The past 34 days have been a tremendous, humbling journey. Thank you for not only acknowledging this book project, but for making it happen. With the support of 118 people we achieved our goal of over $7100—and exceeded it. And, along the way, we have been honored to be featured in notable publications such as GOOD and Women 2.0.
We are beyond excited to move to the next phase of this journey—immersing ourselves deeper in the study and ecosystem of social innovation.
Shivani will be meeting social entrepreneurs, government officials, and the underrepresented in Africa and South Asia in the coming month on a consulting assignment. Her perspective will help keep our work and ideas about social innovation grounded and will inform how we map and evaluate social enterprises.
Neetal has already begun diving deeper into reading—both to gain learnings and begin brainstorming the elements of an effective book in today’s hectic landscape. She has some great interviews and posts lined up for Innov8Social this month, which will also provide a deeper look into social innovation.
As we count down the final hours, feel free to let anyone who may be interested in pre-ordering know before the campaign sunsets Friday evening. Any additional funding received will go toward a small print run of the book and marketing efforts.
For all who have supported—you will receive occasional updates, be invited to participate in polls, etc.. And, in case you have been following this campaign passively & want to be connected to our efforts, you can join here: http://i8s.us/19B3oYN
A heartfelt thank you to you all—and looking forward to the next stage of the adventure!
All the best,
Neetal & Shivani
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What You Don’t Expect When Crowdfunding

We have about fewer than five days left on the clock for our Indiegogo campaign, and the journey has been incredibly revealing, in ways expected and unexpected. Crowdfunding has been a humbling way to tempt fate and meet truth—all in the same handshake.Prior to launching, co-author Shivani Khanna and I interviewed a few individuals who have written books and/or conducted crowdfunding campaigns.

Store open sign

They reiterated that managing a crowdfunding campaign is nearly a full-time job. There is choosing a platform, no easy task considering the wealth of options available. There is writing copy for the crowdfunding page, which is essentially like forming the backbone of the book, i.e. the book proposal. There is creating rewards that make sense and are compelling and, well, rewarding. There is spreading the word about the campaign—doing so to cast a wide net, without annoying those you want to inspire. There is following up, to express gratitude for each show of support.  There is planning updates, so your supporters feel included in the progress of the campaign.

I became mentally ready for all of those things, and budgeted time and mind space to stay on top of our grand crowdfunding undertaking.

What I wasn’t completely prepared for was how vulnerable the experience is. And, how incredibly igniting and motivating that can be.

Take a dream that you hold close for a long time, quietly tucked away between your outward persona and your inward self. And then imagine releasing it for everyone to see, judge, and participate in. That has been a version of this experience. The dream of writing a book for me was seeded a long time ago—and to make the bold decision, that yes, now is the time to act on it and this is the topic to address—is like standing in front of a crowd of people who can read your thoughts. Exposed in the most personal way.

It can’t be denied that when you visit a crowdfunding page, there is a certain tendency to view it with a fair dose of skepticism. Like when your friend, the one who is always dreaming up increasingly far-fetched startup ideas, paints you the picture of another questionable endeavor. You sometimes inadvertently want her to fail so that she gets a dose of reality. Stop living in the clouds, you want to yell, try walking on the ground like the rest of us. When you launch a crowdfunding campaign, that is a reaction that might ensue—though you quickly learn that anticipating that flavor of reaction is not your burden to carry.

You need to focus on those who will pick up pen and write along side you. And, you will find them—the people who believe. With their contributions, shares, and encouragement toward your efforts, you are refueled and shielded again. And, then the focus shifts.

As I write this, we have raised over two-thirds of our goal of $7,100. In more telling terms, 87 funders have joined our team. They have picked up their proverbial pens, ready to write alongside us. And, from someone who grew up playing team sports, this simple fact has literally changed the game. There is a whole new motivation to not let the team down.

I feel a new drive beyond the campaign. There is a new urgency to create something useful and relevant. We aren’t the only ones who are deeply interested in the nuanced intersections of value and impact—we are joined by dozens of others—and our message has amplified be even more. Our focus now is not only to deliver the book to our supporters, but to validate their support.

Would we do this again? Ask us again at the end of the week, and then again in six months. Right now, I can say that the dream lived silently is now set free to fly—and today it flies with the support and strength of a flock. And crowdfunding has given it wings.

 

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#SocinnBook Project Twitter Chat 7/14/13: Recap

In case you missed our Twitter chat covering topics of social innovation and our social innovation book project, here’s a Storify recap!
[View the story “#SocinnBook Twitter Chat 7/14/13: Recap” on Storify]

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#SocinnBook Twitter Chat Sunday 7/14 6:30PM PST!

Shivani delivers
our latest update:
http://i8s.us/1blVRfl

We are 24 days away from the close of our Indiegogo crowdfunding campaign for our social innovation book project. And we have updates!

#SocinnBook Twitter Chat Sunday 7/14 6:30PM PST

Join co-authors Shivani and Neetal for a Tweet Chat on Sunday 7/14 at 6:30PM PST/9:30PM EST!! Use #SocInnBook to follow and participate in the conversation!

Feel free to ask us questions about the book as well as share insights and suggestions you have.

The Crowdfunding Update

We have raised over $800 by 15 funders. To make our goal of $7100, we need you (and you, and you too) to be part of this! Don’t miss the opportunity to be memorialized for eternity by a public thank you in the book plus an early release copy of it. There are lots of great rewards for social innovation
enthusiasts including networking opportunities, institutional awards, and the big cahuna—being the sole angel investor!

 

http://igg.me/at/socentbook/x/3492348
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#SocinnBookProject: Update #1!

It has been 5 days since Shivani and I launched an Indiegogo campaign to help fund our social innovation book project!

And, we have a few updates.
First off, we are grateful and encouraged by the votes of confidence, support, offers of expertise, and contributions made so far. It makes the project so much more meaningful knowing that there are people who are as excited as we are to make this happen.
Read the full update here, and see our latest update video below:

Can a crowdfunding campaign create impact?

One of the things Shivani and I spent some time discussing was whether we could create impact as we crowdfund. An idea we arrived on was to pledge one volunteer hour per $100 raised.A nonprofit I respect tremendously and volunteer at when possible is Second Harvest Food Bank of Santa Clara County. SHFB works on projects to eradicate local hunger. Whether I have volunteered solo or with a team, I am always struck by how efficiently operations are run—and the dignity with which food sorting and distribution is handled.I look forward to logging in volunteer hours powered by your goodwill and contributions. Be sure to check back often and contribute when the time is right!

 

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Big News!

After launching and creating content for Innov8Social for the past two years—including 33 interviews (and counting!), over 200 blog posts, and coverage of dozens of events,  I have partnered with Shivani Khanna, a business strategy consultant in the space and we are excited to announce that we are co-authoring a book on social innovation! Check it out:

The book

Our book will present a framework for understanding social innovation through first-hand interviews with leaders, entrepreneurs and changemakers in the space. It analyzes breakthrough innovations to identify a set of best practices that create both economic and social value.
We are excited to use our lenses of law, business, writing, and entrepreneurship to better understand how existing social enterprises are forming (i.e. legal structures), what kinds of business models they are using, how they measure impact, and what they would have done differently.
Hear us explain more…

 

How you can help

Our vision for the book is for it to be user-friendly, with visuals and graphics to walk through concepts and data. This is a book aimed for the entrepreneur with an idea, the leader trying to implement social impact within the framework of creating business value, and anyone trying to adopt a mindset for social innovation.
To do this book right we want to find the best possible graphic artists, copy editors, and support team.

 

1. give & receive

Contribute to the campaign and receive perks, such as the book (early release eBook and/or signed paperback), as well as opportunities to meet thought leaders, and/or have us present our findings to your company or organization.
Not only will you receive the book—but as one of the supporters who make it possible, you’ll be in it! See your name in print on our thank you page.
Contributions can be made until Friday, August 2nd at 11:59PM PST.

2. share & find

You can also support through sharing with your network and over social media.
Here are a few sample tweets:
Social Innovation Book Project: Creating Value-Based Ventures  by     
Check out the social innovation book project!  by     
You can also can share on Facebook, Twitter, and G+ directly on the campaign page: http://igg.me/at/socentbook/x/3492348

3. suggest & connect

Do you know of any networks, groups, listservs, or organizations that this book would appeal to?

Let us know below…

We are excited for this project and look forward to keeping you posted on its progress!

Learn more + support the efforts!
http://igg.me/at/socentbook/x/3492348

 

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