A New Kind of Company

<p>In recent years, we have seen a surge of "new kind of" companies enter the marketplace.&nbsp; Social entrepreneurs launch these companies with lofty visions of creating positive change while making money.&nbsp; They offer a win-win for everyone, by focusing on the triple bottom line - people, planet, and profits.<br /><br />I am huge supporter of this these "new kind of" companies.&nbsp; I think the only way to create an economically sustainable company is to create an environmentally and socially sustainable one.&nbsp; You can only exploit people and the environment for so long before you run out of those resources.<br /><br />However, in recent weeks, I have started to question whether anyone has truly created one of these "new kind of" companies, including myself with <a href="http://www.atayne.com/" target="_blank">Atayne</a>.&nbsp; I am in no way questioning people's vision or intentions.&nbsp; But I do strongly question if the structure of our financial system allows people to truly redesign the way they establish their company.<br /><br />If someone is going to create a "new kind of" company, they need to start from the very beginning.&nbsp; This includes redesigning the typical corporate mission and vision, company values, management team, product design/service offering, etc.&nbsp; In most cases, tremendous thought is given to these areas and a lot of innovative work has been done.&nbsp; Unfortunately, one very important area has been neglected - company funding.<br /><br />As these "new kind of" companies have entered the marketplace, we have also seen the growth of organizations that are dedicated to investing in them.&nbsp; There are now a handful of environmental and social focused angel, venture, and private equity funds.&nbsp; <a href="http://www.investorscircle.net/" target="_blank">Investors' Circle</a> is one of the most well known offering "patient capital for a sustainable future."&nbsp; Resources like Investors' Circle are critical to help social entrepreneurs.&nbsp; But I believe we need more innovation in this space.<br /><br />As an entrepreneur, I am seeking more innovative funding strategies for the development of my company.&nbsp; Here is my thought: how can you apply a micro-investment strategy like <a href="http://www.kiva.org/" target="_blank">Kiva</a> or grassroots campaign strategy like Obama to engage the masses (and not the monarchs) in funding a company?&nbsp; How can you raise $25 from 10,000 people instead of $25,000 from 10 people?&nbsp; They both lead to $250,000, but there is a key difference that Abraham Lincoln would describe as "of the people, by the people, for the people."<br /><br />In theory, it seems simple. Create a campaign to raise $250,000 in equity investments from 10,000 people.&nbsp; But this is where it gets complicated and our current financial and regulatory system in the U.S. gets in the way.&nbsp; Unless the person qualifies as an accredited investor (makes over $200k a year or has a net worth of over $1M), that $25 investment must be a registered security. Unfortunately, the regulations and compliance of registering this type of security would be so overwhelming for a start-up or small venture that this strategy becomes infeasible. <br /><br />What this means is that potential small investors are prevented from getting involved in start-ups, even if the investment is as little as $25.&nbsp; Why?&nbsp; "The system" acting as patriarch wants to protect people from the companies offering these investments.&nbsp; Some degree of protection is good.&nbsp; However, the assumption is that people who make under $200,000 a year or have a net worth under $1,000,000 are not smart enough to make a decision to protect themselves.&nbsp; So how democratic is our company financing system?<br /><br />If you have some ideas on how to democratize the funding of these "new kind of" companies, I would love to hear your thoughts.<br /><br /><em>Jeremy Litchfield is president / CEO of Arlington-based, Atayne, a newly launched company created to inspire positive environmental and social change through the power of sports and active lifestyles. Website: <a href="http://www.atayne.com/" target="_blank">www.atayne.com</a></em></p>