Back in November, the U.S. Securities and Exchange Commission announced new changes to regulations for investment crowdfunding that would make it easier for more people to back companies they believe in.
Companies could now raise up to $5 million in a year period from non-accredited investors, up from $1.07 million. This was meant to expand on a kind of democratization of startup funding that started with adoption of the federal JOBS Act in 2016. It allowed individuals who may not meet the SEC’s income and wealth requirements for traditional investing to participate, and in turn opened a new avenue for early-stage companies to seek investment.
This measure and more amendments to the regulations went live on Monday, March 15. And this week, D.C.-based fintech platform Goodworld is launching its own crowdfunding investment campaign through the platform WeFunder, which operates thanks to those JOBS Act regulations.
Goodworld, which counts 10 employees working out of the District, Denver and New Zealand, makes technology to facilitate charitable giving. Its goal for the WeFunder campaign is to raise $500,000 on a convertible note (aka short-term debt that converts to equity) led by Mastercard.
A lead investor already committed $25,000, and as of Tuesday afternoon, it had more than $27,000 banked. Current Goodworld investors include Techstars, 500 Startups, and VCs such as Nyca Partners and Fenway Summer Ventures.
Through the crowdfunding campaign, individuals can invest as little as $100. In return, they become a shareholder in the company. It’s an evolution of the digital platforms: You might think of crowdfunding as something like, say, a GoFundMe to cover an individual’s healthcare costs, not for investing in for-profit companies. But crowdfunding platforms are growing in popularity for startups, and these latest changes from the SEC are designed to help spur more activity.
For its part, Goodworld chose the method over more traditional forms of raising capital because of its ease and low buy-in, said founder and CEO Dale Pfeifer.
“Goodworld is a community and crowdfunding is very much a community-driven approach to raising capital,” she said. “The change to the regulations has helped a lot. It has made equity-based crowdfunding much more accessible to everyone. Before you needed to be an accredited investor to invest. Now anyone with $100 and a passion for the company can take an ownership stake.”
Pfeifer said Goodworld saw year-over-year growth of 217% as of February 2021. Its GoodBusiness platform, a giving and workplace engagement platform, launched last summer, and in February 2020, the company acquired Denver’s Cheerful Giving.
“Goodworld’s business platform has grown rapidly over the last year,” the CEO said. “We went live with a number of prominent impact brands such as Citi, Mastercard, City of Los Angeles and America First Credit Union. With our technology, the Mastercard philanthropy portal achieved an 800% volume increase in the last year. Much of Goodworld’s overall growth has come from our rapid acceleration into the business vertical.”
With the campaign, it can offer the chance for regular folks to invest to help that growth continue.-30-