What if anybody could find investment opportunities in local and social enterprises, with the click of a mouse?
ChangeXchange NW, a new website launched Nov. 8 by Portland-based Springboard Innovation,with support from New York’s Mission Markets, will facilitate just that, allowing a range of investors to research offerings in the Northwest and buy a stake in companies — regardless of whether the investors are retirees with $100 or veteran venture capitalists with millions.
ChangeXchange NW aims to be a more sophisticated cousin of crowdfunding sites like Kickstarter. Evolving from a donation-oriented site launched in 2009, the new platform will offer space to crowdfund business startups, while also featuring more advanced investment vehicles in direct public offerings, equity investments, and secondary trading of shares in new and existing businesses.
A demo site launched last week offered a glimpse of how investors will use the site. The homepage lists investment opportunities and an interactive map of the same – think of a less hectic version of popular real estate sites Estately or Zillow. Clicking on individual investments leads to details on the offerings, backgrounds on the companies and pro forma financial documents.
Pearl and Mission Markets CEO Mike Van Patten say that they imagine potential investors meeting business owners and doing extensive due diligence offline, much as private equity investors do now.
But once an investment is made, investors can use ChangeXchange NW to track financial performance, as well as environmental and social performance measured against multiple impact rating tools such as GIIRS. Investors and business owners will also be able to communicate through a closed social network on the site.
“It really bringing efficiency to investing,” says Van Patten.
The question is will investors use the platform? Mike Van Patten believes it will take a few successful investment paybacks through the platform, before Changexchange NW catches on. More established companies looking to expand – say a pizza shop adding locations – will make for good pioneers on the exchange. “When investors are comfortable that they will get their investments back, then it will tip,” he says.
Pearl and Springboard plan an extensive on-the-ground education effort throughout the Northwest over the next 18 months to support the exchange. She’ll get businesses, media, government officials and the public up to speed on how private equity works and how they can put their dollars to work through the exchange. She’s already developing partnerships with ten cities and counties around the region. And Springboard is working on a companion business incubator, Hatch, in Portland.
Both Pearl and Van Patten say a confluence of factors make the timing good for ChangeXchange: demand for local products and services is rising; more impact investors are seeking environmental and social, as well as financial, returns; social entrepreneurship is on the rise; and new federal regulations outlined in the 2012 JOBS Act loosen rules on how private companies can raise money, including through internet solicitations.