St. Louis Economic Development Partnership Launching Crowdfunding Platform

By Barker, Jacob | St Louis Post-Dispatch (MO), February 16, 2018 | Go to article overview

St. Louis Economic Development Partnership Launching Crowdfunding Platform


Barker, Jacob, St Louis Post-Dispatch (MO)


There are thousands of people in the St. Louis area with money to invest who aren't tapped in to the region's startup scene.

A new St. Louis Economic Development Partnership-developed platform, Nvsted, aims to draw more of them in.

"The hypothesis is it's not because they're rejecting the asset class, it's just that they aren't aware of the opportunities," said Cliff Holekamp, a partner in Cultivation Capital who teaches entrepreneurship at Washington University and is familiar with the Nvsted platform.

For more than a year, St. Louis Economic Development Partnership officials have been working to build out the concept using a nonprofit organization they control called the Critical Technologies Corp. In the coming months, they hope to let local companies start using it to find investors.

"If you go out and talk to businesses, the one thing they need is capital," said Jamey Edgerton, senior vice president of business development at the Partnership.

The goal is to open Nvsted to both accredited investors wealthy individuals who make more than $200,000 annually and have a net worth of over $1 million, excluding their residence and those with more modest incomes. Nvsted is waiting for the Securities and Exchange Commission and the Financial Industry Regulatory Authority to process its application to become a funding portal, Edgerton said.

The concept was unlocked by Congress through the 2012 JOBS Act, which directed the SEC to write regulations allowing securities-based crowdfunding. Those rules were finally adopted in 2015, letting companies solicit investors by offering equity or debt instruments using more general advertising or through online portals.

Private companies have launched numerous funding portals in recent years. Locally, St. Louis-based iSelect offers a similar platform for startup companies to connect with accredited investors, and several young companies based here have used it to raise capital.

Edgerton said Nvsted aims to have a fee structure that is lower than for-profit portals and won't take an equity stake in companies that plan to use it.

"We are perhaps one of the only (Community Development Corporations) doing this," he said.

Despite the new rules allowing more general securities offerings to less affluent investors, many startups that raise angel and venture capital still mainly work with high-net individuals who are accredited investors.

"For a company raising money, going to accredited investors only is usually attractive because specifically what you have to disclose is much more general," said Andy Hoyne, a senior partner at law firm Polsinelli who focuses on venture capital. …

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