Some local companies are gearing up for crowdfunding -- getting lots of small venture capitalists instead of large investors or banks -- and hope that the Senate approves legislation that recently passed the U.S. House of Representatives.
The bill, H.R. 2930, would allow companies to go solicit small investors and raise up to $2 million a year, issuing stock for their purchases. Congressman Jerry McNerney (D-Stockton) voted yes on the House version.
Several entrepreneurs are involved in the coalition called ICO (Initial Crowd Offering) Group, according to Andrea Corry of TopMind Public Relations and spokeswoman for Schubros Brewery. Those include Ian Schuster of Schubros, Daniel Hsu of Danville, who runs T.I.L. Darling, an online clothing boutique, Bob Johannsen from Paradigm Integration, Inc., based in Concord and Bryan Brumfield of Brumfield Cellars in Healdsburg.
"We've been talking to members of the San Ramon and Danville area Chambers of Commerce, including business consultants and attorneys," Corry said, adding that attorney Armand Estrada will be working with ICO Group.
One problem noted by critic of crowdfunding is the risk. Established companies have a tack record of profits and loses that give an investor information about how its stocks have done historically.
Corry said small businesses are naturally a more dangerous investment, but said Schubros, while it can't make any guarantees, is "pretty confident that things are going to go well."
Another worry is the responsibility of paying dividends to potentially of new shareholders, something she said is already being addressed by Schubros. Corry said the exact method of paying dividends depends on the final bill approved by Congress.
"Dividends may go through Internet intermediaries. They may become auto-payments from our bank-account," she said. "Paypal may become the official route, or we may have to invest some in building out a system not much unlike a payroll system."
So far, Schubros has raised $250,000 so far for a buck a share, offering small gifts like stickers, refrigerator magnets, T-shirts and beer glasses. Corry said the company has held a vote and received shareholder approval for issuing a further 200,000 shares for a crowdfunding equity offer.
Meanwhile, the brewery needs a place to actually begin brewing. Corry said
"We are still looking for a location for our Distribution Center and Taproom, as well as Research and Development Center," she said. "We really want to locate those in San Ramon too, and actually shift HQ and admin operations over to that location -- but it's not easy to find an affordable place that's properly zoned here."