WASHINGTON, D.C. – U.S. Senator Jeff Merkley today announced the award of a $49,275 USDA grant to the nonprofit Hatch Innovation, Inc. to connect rural small businesses with local people who want to invest in them through Oregon’s newly launched crowdfunding investment process.
Crowdfunding is a new, innovative method of financing for small businesses in which a business can raise capital from many different small-dollar investors, often in their local community, who in turn each get to own shares in the business and receive a return on their investment if the business does well.
Hatch Innovation is working with the Northeast Oregon Economic Development District on the project to support a “grow your own” business development and fundraising climate that improves entrepreneurs’ access to capital, allows ordinary residents to invest in local businesses and, ultimately, creates and saves jobs in the region.
Merkley has been a leader in working to authorize crowdfunding at the national level, passing the bipartisan CROWDFUND Act through Congress in 2012. Since then, however, the U.S. Securities and Exchange Commission (SEC) has stalled on finalizing the legislation’s rules to create a national crowdfunding market, and Oregon has moved to fill the void by creating its own state-based marketplace for Oregonians to invest in Oregon businesses.
In January 2015, Oregon created new rules creating a pathway for registered Oregon small businesses and startups to raise crowdfunding capital up to $250,000 directly from anyone who lives in Oregon. Unlike existing crowdfunding platforms such as Kickstarter, this crowdfunding investment model would allow community members to become actual small-dollar investors in a business, each owning a small piece of it.
“Crowdfunding is an innovative tool for local communities to help their homegrown small businesses get off the ground or expand, and this grant will help Eastern Oregon communities kickstart small business growth,” said Merkley. “Crowdfunding has tremendous potential to help drive our small business economy, and Oregon – as it so often does – is leading the way. But crowdfunding will never realize its full potential to boost our small businesses without a national system that isn’t limited by state lines. It’s been more than three years since the CROWDFUND Act was passed, and it is totally unacceptable that the SEC has failed to finalize the national crowdfunding rules that Congress envisioned.”
With today’s grant, Hatch Innovation’s educational “InvestOR Ready Accelerator program” will directly assist small, emerging and growing rural businesses in Baker, Wallowa and Union counties, while also training local economic development professionals to learn how to offer this program in the future. This will be the first time local technical assistance has been made available to help Northeast Oregon businesses learn the rules, file comprehensive disclosure documents, develop marketing outreach materials, and complete the financial prospectuses required to put forth a community public offering.
In addition, Hatch Innovation will deliver workshops to educate potential investors on the community public offering process and build their capacity to make sound investment decisions.
The grant is provided through the Rural Business Development Grant (RBDG) Program administered by U.S. Department of Agriculture (USDA) Rural Development to support the development and expansion of private businesses and job creation in rural communities. Funding is contingent upon the recipient meeting the terms of the grant agreement.
Congress established the RBDG Program under the 2014 Farm Bill. The new program combines USDA’s former Rural Business Enterprise Grant (RBEG) and Rural Business Opportunity Grant (RBOG) programs. Like its predecessors, the new program is designed to assist with the startup or expansion of small and emerging private businesses in rural communities.
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