GSA Business
April 16, 2014
By Ashley Boncimino
The S.C. Small Business Chamber of Commerce launched its private placement investing portal this week, which allows accredited investors to look for investing opportunities within the state.
The private placement investing portal is aimed at connecting accredited investors to business projects from entrepreneurs, small business and nonprofits that are seeking investors, private loans and other forms of capital.
“Most high-income people don’t know that they can invest directly with a small-business owner looking for financing. The law says that they can, and we want to make it easy for them,” said chamber President and CEO Frank Knapp, who is spearheading the project.
When the site has a sufficient number of registered accredited investors, the small-business chamber will start posting investment opportunities. The private placement investing portal is only open to accredited investors, as limited by the U.S. Securities and Exchange Commission.
Three months ago, the SEC changed its rules to expand fundraising opportunities for businesses and might do so further. Once only permitted to raise capital from within inner circles, businesses and, particularly, startups are now allowed to publicly advertise that they’re seeking investments, which broadens the pool of potential investors.
SCcrowdfund.com’s other portal, the donation crowdfunding arm, was launched in late 2013, and includes four business concepts from S.C. entrepreneurs.
“What we’ve found is that S.C. businesses aren’t looking for donations, they’re looking for investors,” said Knapp.
Accredited investors can sign up for no cost, and their information is kept anonymous. After being alerted about potential investment opportunities, they can opt to request further information, at which point the entire process moves offline.
The private placement investing site is ready to begin registering accredited investors with the site. Accredited investors are people who make $200,000 or more per year, couples who make $300,000 or more per year or individuals with a net worth of $1 million or more.
“We need people who meet the financial criteria to look at investing in S.C. companies,” said Knapp. “Instead of investing all their money in Wall Street, they need to start investing in Main Street.”
South Carolina has thousands of accredited investors, according to Knapp. “We’re not a wealthy state, but we do have people that can invest if they knew they were allowed to do it directly and it was easy for them, and that’s what our portal does,” said Knapp.
For example, the state employs at least 88 people who earn over $200,000, most of whom are employed by universities, he said.
The donation crowdfunding portal is a “proven business model” that they’ve been able to learn from, said Knapp.
The portal, called Invest in a New Economy, is a partnership between the small-business chamber, the American Sustainable Business Council and Mission Markets Inc., a New York-based securities firm.