By Carly Meyer
The theme for the April general meeting of the Princeton Merchants Association was “Innovative Financing for Entrepreneurs,” a hot topic because 2014 is shaping up to be a crucial year for Main Street — or should we say Nassau Street.
We invited two experts to inform the community about opportunities available on the financing front in two specific areas — crowdfunding and state funding.
Chris Tyrrell, a global advocate for crowdfunding, talked about the Jumpstart Our Business Startups Act, or JOBS Act, which went into effect last year, while Kathleen Coviello, the director of the Technology & Life Sciences Division of the New Jersey Economic Development Authority, addressed funding initiatives offered by her agency.
Tyrrell kicked off the event by telling members about Title III, a key part of the JOBS Act that has not yet gone into effect.
Tyrrell, who is based in Princeton, is chairman of CrowdFund Intermediary Regulatory Advocates, and he is also CEO of OfferBoard, a local firm that represents emerging businesses raising capital as well as investors seeking to diversify their investments by establishing credible positions in the private securities marketplace.
He says that since the JOBS Act was signed into a law, the word on the lips of business owners and investors alike is “crowdfunding,” a notion that is one of the JOBS Act’s key provisions.
Through websites like Kickstarter or GoFundMe, the Internet is already a hotbed of crowdfunding. But in the case of those sites, financial contributors are not investors but donors, with no hope or expectation of remuneration. Title III will deliver securities to investors.
While the SEC has not yet given Title III the green light, approval is anticipated by the end of the year, and businesses will want to know if crowdfunding is right for them by the time online platforms begin making transactions possible soon thereafter.
“Princeton is probably a good community to think about crowdfunding in because it has strong ties to many really important capital opportunities,” Tyrrell says.
Princeton has been alert to the possibilities of crowdfunding for a while — in fact, our members have been working toward a funding portal for local businesses for a while now. In 2012, the PMA sponsored a visit to Princeton University by Michael Shuman, author of Local Dollars, Local Sense, and that discussion spawned an initiative under development called Community Investment Exchange, or CIEx.
Through CIEx, “Local businesses could find access to capital that they might not otherwise be able to attract by tapping into local sources of people who ‘believe in their efforts,’” says Mark Censits, owner of CoolVines and co-founder of CIEx, who also spoke during the crowdfunding portion of the meeting. “Opportunities for investment are right here in the community, person to person, rather than going through a stock exchange.”
Fran McManus, owner of Zafra Press and longtime marketing consultant to the Whole Earth Center, arranged Shuman’s visit in 2012. McManus sees initiatives like CIEx as a significant new way for Princetonians to boost the local economy.
“It’s great to buy local, but the money that’s leaving the community by truckload is investment money,” she says. “People can’t invest in Main Street, so they invest in Wall Street. This can change all that.”
The PMA is interested in seeing local businesses grow. There’s a passion here to enable entrepreneurs to become successful, again and again. In a community like Princeton, we already support one another. Title III of the JOBS act will make us even stronger.
Following Tyrrell, Coviello spoke about the many millions of dollars offered by the state to businesses. Under her direction, the EDA has delivered over $600 million in direct investments, business incentives, tax credits, and venture fund investments through the Edison Innovation Fund.
One example she cited was the Technology Business Tax Certificate Transfer Program, which allows approved businesses with net operating losses to sell their unused net operating loss carryover and unused research and development tax credits to a profitable New Jersey corporate taxpayer.
Under the program, companies can turn tax losses and credits into cash to fund allowable items, such as equipment purchases or facilities improvements.
Another initiative being organized by the EDA is a new quarterly event that will allow angel investors and venture capitalists to hold “office hours” to meet with entrepreneurs. Coviello said the first meeting will be held on June 10 at the EDA’s office in South Brunswick.
Coviello says finding investment is one of the toughest tasks facing entrepreneurs, who typically get investors through a referral from someone who knows the start-up company, or by finding an investor at an event and hoping to engage their interest enough to arrange a future meeting.
For more information on these, or other funding and investment opportunities offered by the EDA, business owners can visit the authority’s web site at njeda.com.
Carly Meyer is president of the Princeton Merchant’s Association. The Hometown Princeton column is provided monthly by the PMA. On the web: princetonmerchants.org.