When former President Barack Obama signed The Jumpstart our Business Startups Act (JOBS Act) into law, new startups began popping up everywhere.
The legislation was largely supported by the technology and startup community, as it modernized regulations, requiring the Securities and Exchange Commission (SEC) to allow crowdfunding so that anyone who wants to start or grow a business can use an online or equity crowdfunding platform to raise up to $1 million by selling stock in their company.
This month, a new equity crowdfunding platform, GrowthFountain, launched in New York, aiming to separate itself from the pack with an emphasis on investing at the local level.
Founded by former hedge-fund manager Ken Staut (pictured above), GrowthFountain’s mission is to help startups and small businesses looking to publicly raise capital by formalizing the fundraising experience among friends, family and local investors.
“Our vision is for companies to no longer need a merchant banker or investment bank, all the way from inception to IPO. Our mission from the start has been to level the playing field for America’s small businesses,” said Staut. “If you think about it from a high level, local business establishments are good at running a bar, managing a restaurant or making widgets, but likely inundated when it comes to legal documents. So we’ve created a variety of tool for businesses in various stages to assess their worth as well as automate legal templates.”
The company provides tutorials and tools specifically tailored for local equity crowdfunding, including a series of calculators to help companies determine the amount of capital to raise and explore potential valuations. When it comes time to raise funding, GrowthFountain also provides a streamlined process to facilitate the creation of SEC-required documentation.
GrowthFountain collects a six percent success fee from companies that complete an offering on the platform and charges an upfront fee for using the service.The first batch of companies to use GrowthFountain’s platform run the gamut from vodka businesses to virtual education platforms. Prior to its launch, GrowthFountain also partnered with credit unions, taking a new approach to the equity crowdfunding model.
“GrowthFountain differentiates itself by focusing on credit unions with massive distribution capabilities,” said Staut. “Through our partnership with Callahan & Associates, we already have signed exclusive agreements to reach over 750,000 credit union members and we expect to reach over 10 million credit union members in the next 24 months. This strategic differentiator represents a huge advantage for companies listing on GrowthFountain that are trying to get their offering in front of as many potential investors as possible. Additionally, this strategy reinforces our brand as the platform that is championing local businesses – by working with regional credit unions we have access to the communities that have a vested interest in seeing their local business succeed.”
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