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Jenny Kassan's blog

Raise Capital on Your Own Terms!

When you hear the word “investor,” what do you picture? When I ask most people this question, they describe a man in a suit (or, if in Silicon Valley, maybe khakis and a button down shirt) in a fancy office spending every work day combing through pitch decks, executive summaries, and due diligence and barking tough questions at terrified entrepreneurs.

Most people picture the type of investor who I call professional investors. These are wealthy individuals and organizations, sometimes investing their own money and sometimes investing on behalf of others. They come in many flavors such as angel investors, venture capitalists, private equity funds, family offices, private foundations, wealth managers, etc.

When entrepreneurs think that professional investors are the only source of investment, many of them very quickly dismiss raising investment capital as a possibility.

They say things like this to themselves:

  • Why would these people even consider investing in my business? I doubt I could give them what they’re looking for.
  • I wouldn’t even know how to get my foot in the door with these people or even how to find them.
  • Don’t these investors want to take control of the businesses they invest in? I’m not ready to give up control. Don’t they even sometimes fire the founder?

If you are limiting yourself to the tiny pool of investors who fall into the professional investor category, you may be right to have fears and concerns. These kinds of investors tend to follow a very specific investment model that is not a good fit for most businesses and may very well not be a good fit for you. The good news is that there are many sources of investment capital and even if professional investors aren’t right for you, I can almost guarantee that there are investors out there who ARE right for you.

  1. The vast majority of investors are satisfied with a financial return that is much less ambitious than what angels and venture capitalists demand.[ii] And the vast majority of investors care about a lot more than financial return when making investment decisions.
  2. You can design the type of investment you offer any way you want to – it does not have to be “expensive.”
  3. It is possible to raise capital (equity or debt) without giving up any control.
  4. Investors can get healthy investment returns even if there is no “liquidity event.”
  5. Investors can get healthy returns from steady-state businesses (i.e. ones that do not grow explosively).[iii]
  6. The “smart money” that supposedly comes from professional investors (i.e. all that expertise that they supposedly have) is questionable. Some professional investors can be a huge asset to the companies they invest in, while others will take the company in the completely wrong direction. The founders often know a lot more about the right direction to take their business than an outside investor does.
  7. It is possible to design a company and its financing strategy in a way that makes lawsuits for failure to maximize investor return highly unlikely.
  8. The universe of investors is far larger than angels and venture capitalists and each investor is unique.

Based on my ten years of experience helping social entrepreneurs raise capital from investors, I honestly believe that any mission-driven entrepreneur, armed with the right tools, information, and mindset, can raise capital from supportive, values-aligned investors.

To learn more, check out my course “Escape the Bootstrap Trap 30-Day Challenge” which includes:

  • Basic capital raising literacy
  • How to find the right investors for you
  • How to get investment-ready

Go to for free access to the course and a discount code for my book, Raise Capital on Your Own Terms: How to Fund Your Business Without Selling Your Soul.

Jenny Kassan has over two decades of experience as an attorney and advisor for mission-driven enterprises. She has helped her clients raise millions of dollars from values-aligned investors and raised over one million dollars for her own businesses. Jenny is certified as a coach by the International Association of Women in Coaching.

New Financing Options for Your Business Under the JOBS Act

Back in 2010, I was running the Community Supported Enterprise (CSE) Program at the nonprofit Sustainable Economies Law Center (SELC).

I had co-founded SELC with another attorney, Janelle Orsi, to help early-stage, mission-driven entrepreneurs succeed. Our job was to help them navigate the rules that govern the raising of capital as they work to create a healthy, just, and sustainable economy.

That summer the CSE program had some great law student interns. We decided to focus on changing the securities laws – the lavws that govern how enterprises can raise capital from investors.

We created a petition for rulemaking to the Securities and Exchange Commission (SEC). Our request was simple: exempt from any regulatory requirements any investment opportunity in which no investor could invest more than $100. We figured that if the most that anyone could lose was $100, requiring the enterprise to jump through a bunch of regulatory hoops was unnecessary.

The American Sustainable Business Council was an early supporter of the idea and helped to promote it. Soon, the idea started to spread, and the White House endorsed exempting investment crowdfunding from securities law requirements.

On April 5, 2012, President Obama signed the JOBS Act. It had changed quite a bit from our original proposal, but it did create several new exemptions for different types of investment crowdfunding.

Below is a summary of some new tools created under the JOBS Act. While investment crowdfunding had been legal for decades before the JOBS Act passed, (see this post for more details on the pre- versus post-JOBS Act options), the new law added some new legal compliance options for enterprises that want to be able to advertise their investment opportunities to everyone.

1. Title II of the JOBS Act – Rule 506(c)
This exemption allows a company to publicly advertise an investment opportunity and there is no cap on the amount that can be invested by each investor or the total amount raised.  However, under this rule, all the investors must be accredited, which generally means individuals with at least $1 million in net worth (excluding their primary residence) or $200,000 in annual income.

2. Title IV of the JOBS Act – Regulation A+
This exemption allows a company to raise up to $50 million, with anyone able to invest, not just accredited investors, and the offering can be publicly advertised in all 50 states. The downside is that the company must have audited financials and must complete a filing process with the SEC that can take approximately four months and costs $75,000 to $125,000 in legal fees. Once a company has raised money under this rule, it can file to become a public company and trade its securities on an exchange.

3. Title III of the JOBS Act – Crowdfunding Exemption
This is the part of the JOBS Act that took the longest to go into effect. It took more than four years for the SEC to complete the detailed rules governing how this exemption could be used and for the crowdfunding platforms authorized under the law to go through the registration process.

Starting on May 16, 2016, this part of the JOBS Act finally became available.  This is a big deal for small and micro entrepreneurs. Here are the basic requirements:

  • You can raise up to $1 million per year.
  • There is a cap on the amount that can be invested per investor: 5% of the lesser of the investor’s annual income or net worth (or 10% if the investor’s net worth and annual income are greater than $100,000).
  • Offerings must be conducted through a registered intermediary – you are not allowed to talk about the offering outside of the registered online crowdfunding portal.
  • You can accept investors from all 50 states.
  • If you’re raising more than $100,000, you have to get reviewed financials from a CPA.
  • Your financials are public and must be available on your web site.

These three new tools each have their pros and cons, as all capital-raising strategies do. It’s important to understand all of the options before choosing your strategy. Every business is different, and what works for one may not serve another. But at least now your small business has more choices to raise capital. 

Read this comparison chart of various crowdfunding options.

Jenny Kassan is the Founder of Jenny Kassan Consulting, a business advisory firm. She is also an ASBC member and member of the Advisory Committee on Small and Emerging Companies at the Securities and Exchange Commission.