Many young businesses that need to raise capital aren't aware of "Direct Public Offerings" (DPOs).
Similar to the very popular crowdfunding model, DPOs allow businesses to raise capital directly from small investors, facilitated by the advent of "Investment Crowd Funding."
Companies don't have to rely on finding angel or venture capital investors; they underwrite themselves and self-administer public securities offerings to both accredited and non-accredited investors. They are allowed to market and advertise the offering through any venue they choose.
Ben & Jerry's, Annie's Homegrown and Real Goods are examples of social enterprises that have used DPOs to raise capital.
Cutting Edge Capital, which raises capital for budding social enterprises, also has CuttingEdgeX, an online platform that matches socially and environmentally oriented businesses with small investors.
"Mainstream models for raising capital leave out vast, untapped numbers of people who want to invest in the businesses and organizations that provide real value in the real world. We are leading a movement that is bringing new capital — by directly engaging more people as investors — to the new economy — an economy that is resilient, just and sustainable," a representative for Cutting Edge said.
Besides getting access to a wide variety of investors, businesses don't have to give up control of the company or feel the pressure of venture capital. It also helps them to build public support and recognition.
Investors get an unsecured note with a 4 percent annual interest rate for five years. It's the only nationwide platform that allows both accredited and non-accredited investors to discover and participate in DPOs, according to Cutting Edge.
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.
Image of Ben & Jerry's headquarters in Waterbury, Vt., by spirit of america via Shutterstock