Funding Your Startup With a DPO

Brian BeckonV.P. Cutting Edge Capital

Our Mission: At Cutting Edge Capital, our mission is to

create a New Economy that is more in-clusive, equitable and democratic.

We do this by helping businesses and nonprofits raise capital from their com-

munity in a way that aligns with their mission

and strategic goals.

Investing on Wall Street

Accredited Investors

At least $1 million in net worth excluding primary residence or

$200,000 in annual income

$5 million for entities

is this what an accredited

investor really looks like?

Investing in Community

Communities With Vibrant Small Enterprises Thrive

Members are:

Healthier

More Open and Friendly

More Engaged in Civics and Community

Capital Raising Options

Institutional loans

- Requires strong financials

- Usually requires personal guarantees or collateral

Donation/reward-based crowdfunding

- Contributors can’t get their money back or any ROI

- No return on investment

- Good option for small amounts

Securities-based investment

- Highly regulated

- Get help from a securities lawyer

Securities law: A trap for the unwary

General rule: Any offering must be either registered or exemptMust comply with both federal and state laws

Private placement under Rule 506(b)

Must have pre-existing substantial relationshipUp to 35 non-accredited investorsCost goes up if any non-accredited investorsVC firms and institutional investors typically look for companies with potential for 10xInvestors are likely to dictate terms of investment, may seek control & board seat

• Rule 506(c) under JOBS Act

Allows advertising and general solicitationAll investors must be accreditedMust independently verify accredited status

Exempt investment crowdfundingExemptions adopted in about 25 states

SEC rules expected within a month

Laws vary widely

Typically limited to $1 million

Per-investor limitations

Some states require intermediary, no direct contact

No regulatory review provided

Direct Public Offering(DPO)

Exempt at federal level

Registered at state level (except for nonprofits)

Allows for advertising and general solicitation

Open to accredited and unaccredited investors

Amount potentially unlimited, depends on strategy

Entrepreneur is in complete control of offering

Who Can Do a DPO? Any type of entity Early stage or mature Raises from $250,000 to $50 million Any industry Any state Need a compelling story (but our

marketing partner can help write it!)

How does it work?• We review corporate structure• Select type of security to offer

DebtPreferred stockCommon stockRevenue share

• Select legal compliance strategyIntrastateRule 504Regulation ANonprofit

• Prepare offering documents • Register offering with state securities regulators• Launch your offering!

SuccessfulDPO’s

Massachusetts Worker Cooperative (conversion from sole proprietorship)

Offering non-voting preferred stock

Raised $500,000 from Vermont and Massachusetts residents in 2 months

- Worker Owned Cooperative

- Start up Green Waste Composting Business

- Raised $340,000 in a Direct Public Offering

CERO Cooperative

Green City Growers

- Urban Rooftop Farming business

- Raising $300,000 from MA Residents

- Leveraging existing community connections to run a successful capital raising campaign

Farm Fresh to You- Created a

“Green Loan program” for CSA members

- Offering renewed twice

- raised over a million dollars (and counting)

Where do you find DPO’s?

DPO Marketplace

DPO Marketplace

Online Investment Tool

Summary of CEC Services

Q&AContact:

brian@cuttingedgecapital.-com