Wendy Culverwell, Sustainable Business Oregon – Dec 4, 2014, 5:43am PST UPDATED: Dec 4, 2014, 9:31am PST
Community Public Offerings, or an Oregon form of crowdfunding, is on track to take effect Jan. 1 following a hearing Wednesday in Salem. The Oregon Department of Consumer and Business Services will continue to accept written comments on the new rules through next Wednesday.
Generally, the new rules will allow Oregon businesses to raise up to $250,000 from Oregon residents, with a cap of $2,500 on individual investors. The limit was raised from the original $2,000.
The program is authorized under the federal JOBS Act and is already in effect in various forms in more than 10 states, including Washington, Texas, Tennessee and others.
Amy Pearl, founder of Hatch Innovation for social entrepreneurship, played a leading role in developing the rules, securing approval at the state level and cultivating the first crop of businesses to take advantage.
Pearl estimates the move could unleash nearly $1 billion in new capital for small Oregon businesses, a figure based on 1 percent of the combined retirement savings of all Oregonians.
About a dozen businesses in Portland, Eugene, Southern and Eastern Oregon are preparing to file for public offerings, though they’re prevented from publicly discussing them at this point.
Wednesday’s hearing was sparsely attended, but included two key endorsements.
Bob Banks, a Portland attorney who has specialized in securities litigation for 40 years, said the $2,500 upper limit means investors won’t be crippled by the inevitable failure of some startups.
“There aren’t going to be too many people that if they lose their entire $2,500 will miss a meal or not be able to pay their electric bill,” he said.
Nevertheless, he cautioned that whenever funds are exchanged, there is the potential for abuse.
“There will probably — unfortunately — be circumstances with bad actors,” he said.
Community public offerings hold great promise for minority-owned startups, offered Jarvez D. Hall, outreach manager for Small Business Majority, a Portland agency representing small business interests.
“It’s imperative to communities of color that may not have access to traditional lending,” he said.
Written comments may be submitted until 5 p.m. Dec. 10 to Shelley.A.Greiner@state.or.us.