A Blue Letter Day for Veterans?
Community Public Offerings are finally gaining momentum to provide equity finance for Veteran owned startups, including franchises.
Whether a red-letter day or a blue letter day doesn’t matter, what’s important is that it could be a “V” letter day for Veteran Small Business because as of April 21, 2017 the Securities and Exchange Commission (SEC) is now allowing interstate advertising for Community Public Offerings (CPO) to raise cash.
So, what’s a CPO?
If you Google: “Community Public Offering” you should find it at top of the list. You’ll also find a lot of information about the CPO, most of it posted by Hatch Oregon, which is leading the charge to make the CPO a viable way to raise cash in Oregon. And Hatch’s efforts will indirectly help Veteran small businesses in another 35 states where its legal to offer a CPO.
Before April 21st a CPO couldn’t even advertise its offering in the Oregonian Newspaper because it be might be read as close as 10 miles away across a state line in Vancouver, Washington. Now it doesn’t matter if someone in Philadelphia reads the advertisement. New SEC Rule 147A will permit issuers to “engage in general solicitation and general advertising of their offerings, using any form of mass media, including unrestricted, publicly-available Internet websites, as long as the sales of securities so offered are made only to residents of the state or territory in which the issuer is resident”.
The CPO is not about funding vehicles like Kickstarter which provides non-investment funding for contributors who are willing to pre-purchase, contribute to, or support a business for personal reasons.
The CPO is a securities-based funding giving ownership, or a promise of future revenue to investors in equity or debt. This is a mechanism that enables broad groups of investors to fund startup companies and small businesses in return for possible economic gain. Investors can give money to a business and receive ownership of a small piece of that business. If the business succeeds, then its value goes up, as well as the value of a share in that business—the converse is also true.
What this means is that any Veteran entrepreneur can access significant equity capital with modest organizational costs to acquire or build a business. Up until recently equity offerings were almost entirely sold only to high net worth accredited investors in private offerings. Individual states do set some restrictions on the CPO for purchases by the public, including, but not limited to, the amount of investment purchased and age of the investor. However, the size of the CPO can sometimes exceed $1,000,000 (limited to $250,000 in Oregon) and the organization and filing cost of the CPO can be under $5,000 as opposed to multiples of that amount for a private offering.
The current lifting of the advertising restriction is very important because one can now use social media to market an offering and to let the world know about your business idea as well. With a CPO, a Veteran could acquire rights to multiple franchise locations and stage in the required equity for each one, setting a minimum and maximum for their CPO.
If you’re a Veteran interested in learning how to advertise or structure a CPO to fund your equity to start a business or to acquire a franchise, just contact the Veteran Business Services Help Desk at 503-344-6945. If you’re a Combat Veteran who wants to learn how to help other Veterans raise capital in your home state using VA Chapter 31 benefits, just forward your DD 214 and we’ll arrange an appointment to discuss an evaluation and application. And if you’re a Veteran who is a graduate of the Entrepreneurial Bootcamp for Veterans with Disabilities (EBV), we’ll provide you a special discount on all our franchise services. We guarantee a Veteran client the best price and discount on any franchise acquisition.
VBS Founder and Managing Director, Jim Mingey, is a decorated Vietnam veteran raised from a proud military background. An entrepreneur for more than 35 years, Jim can relate on a personal level to the needs of the veteran small businessperson, and possesses the practical knowledge to implement his experience in today’s market. Jim participated in the EBV Program at Purdue University, is a mentor at American Corporate Partners, developed the first approved franchise training program for the Vocational Rehabilitation and Employment (VR&E) Program at Veterans Administration, and was instrumental in forming the first equity fund in the United States exclusively for veteran owned small businesses and franchises: The Veterans Opportunity Fund. Jim intends to keep on ‘advocating’ for veterans in franchising.