Episode 36: Getting Money Working for Justice with Morgan Simon

Episode 36: Getting Money Working for Justice with Morgan Simon

In this episode, Capital Insight co-hosts and securities attorneys Jenny Kassan and Michelle Thimesch talk with Morgan Simon, co-founder of Candide Group, an investment firm working with families, foundations, athletes, and cultural influencers who want their money working for justice.

Key Takeaways:

“How do we make sure that impact investment isn’t just another form of wealthy people getting to decide what the world is going to look like? That means being really intentional about community engagement, design, governance, and ownership – and seeing how to use investment models to encourage that transfer of community resources and control.”

“Money is the source of independence and power…For instance, when we talk about poverty, that’s really more about autonomy and the ability to make great choices for yourself and your family and your community, versus any particular metric around how much money is in your bank account. When we address that more holistic view, it leads to very different investment approaches.”

Bio:

Morgan Simon has two decades of experience making finance a tool for social justice. In that time she has influenced over $150B and is a regularly sought out expert on impact investing. Her book, “Real Impact: The New Economics of Social Change” has been featured everywhere from Harvard Business School to the United Nations. She is a regular voice in media and an active investor as Founding Partner of Candide Group, a Registered Investment Advisor.

Get In Touch:

Website: https://candidegroup.com/
Buy the book from an indie retailer: https://www.politics-prose.com/book/9781568589800
Buy the book on Amazon: https://www.amazon.com/dp/B01NA02VFL/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1

Socials:

Insta: https://www.instagram.com/morgansimon1/

Twitter: https://twitter.com/morgansimon1/

Facebook: https://www.facebook.com/moneyandjustice

Additional resources:

Episode Credit:

Intro and outro are voiced by Marina Verlaine. She can be contacted at reel.peach.vo@gmail.com

 

Check out past episodes here!

Episode 32: Integrating Money and Meaning with Maggie Kulyk

Episode 32: Integrating Money and Meaning with Maggie Kulyk

In this episode, Capital Insight co-hosts and securities attorneys Jenny Kassan and Michelle Thimesch talk with Maggie Kulyk of Chicory Wealth, an investment advisory firm that helps people align their values with how they understand their financial stewardship. Maggie shares insights about the diversity of investors she works with and what they care about.

Key Takeaways:

“If we were gonna be about helping to transform how money moves in this culture…particularly in communities that have historically had what little wealth they had extracted from them…then we needed to look not at investing in women entrepreneurs in the classic VC model, but instead look harder at what the model is and how it supports communities.”

“Money is increasingly meta…money is this amorphous thing in the publicly-traded investment world; it is very removed from most investors’ experience of it. So for someone to be able to invest directly in someone’s business and see that business thrive and give root to a community, it means a lot to people.”

Interview

Maggie Kulyk

Company

Chicory Wealth

Bio: 

Maggie Kulyk has worked in the financial industry since the early 2000s, but her main interest is in people – getting to know them, listening to them, and helping them balance their finances with the rest of their lives in a way that has meaning to them. She opened Maggie Kulyk and Associates in 2004, and in 2018 this business became Chicory Wealth, a fee-only financial life planning and sustainable wealth management firm. Maggie graduated summa cum laude with a BA in political philosophy from West Chester (PA) State University, then worked for six years in her family’s business, Rogers Brothers Corp. in Albion, Pennsylvania. She went on to receive an MDiv from Candler School of Theology at Emory, and finished ABD from the Graduate School of Religion at Emory. She is a CRPC® (Chartered Retirement Planning CounselorSM), a Chartered SRI CounselorTM, and a member of the Financial Planning Association and the Life Planning Institute. She’s also the author of Integrating Money and Meaning: Practices for a Heart-Centered Life and president of the board of the nonprofit Women Donors Network.

Get In Touch:

Website: https://chicorywealth.com/

Socials:

Affiliate website: https://www.integratingmoneyandmeaning.com/

Company twitter: https://twitter.com/ChicoryWealth/

LinkedIn: https://www.linkedin.com/in/chicorywealth/

Company website: https://chicorywealth.com/

Additional resources:

  • Angels of Main Street is a community of investors with no minimum wealth or income requirement to join.  If you’d like to be part of a community of diverse investors who want to make a difference with their dollars, please join us in Angels of Main Street!

Episode Credit:

Intro and outro are voiced by Marina Verlaine. She can be contacted at reel.peach.vo@gmail.com

 

Check out past episodes here!

Creating a Regenerative Business Ecosystem

Creating a Regenerative Business Ecosystem

by Bennet Zelner

The centralized, disconnected pattern of our current economic systems facilitates the extraction of resources from individuals and communities to support the interests of one group – financial investors – above all others.

Giant corporations beholden to Wall St. have displaced local businesses on Main Street. The bulk of the economic value produced in local communities has been extracted by a remote set of corporate shareholders. The extraction of this financial capital means that it is no longer able to recirculate in local communities to fuel local investment. 

Just as shareholders are disconnected from the communities from which they extract financial returns from, corporate decision-makers – managers – are disconnected from the local ecosystems whose resources they’re making decisions about. Because managers are not embedded directly in these ecosystems – and because their primary incentive is to maximize shareholder profit – they make decisions about how to use local resources that don’t account for the health of these resources and their ability to regenerate themselves in the future. This is true not just for natural resources such as plants, air, and water; it is also true for human resources.

If we look at evidence from across countries, there exists a distinct correlation between income inequality on the one hand, and measures of both mental illness and addiction on other. This pattern reflects the combined, interactive effects of the extraction of financial and human capital. 

The extraction of social capital – the depletion of social networks – impairs the foundation of local economic activity, because such activity depends on dense social networks.

So we’ve got these multiple extractive processes facilitated by different forms of disconnection. The core problem is the disconnected, centralized pattern of relations that characterizes the economic and social systems supporting our individual and collective well-being. The solution is a pattern shift – a shift to a distributed, connected pattern, in which dense relational networks facilitate the metabolic recirculation of resources in order to support individual and collective well-being, and the ability of our systems to regenerate themselves. 

Shifting the pattern is challenging because the systems we have established sustain themselves through institutional structures that support the extractive pattern and impede the emergence of a regenerative one. 

Financing mechanisms that prioritize investor interests over all others are fundamentally incompatible with the metabolic, recirculatory resource flows that define regenerative approaches. Hockey stick returns and quick exits are fundamentally incompatible with regenerative approaches. Businesses that are beholden to traditional investor pressures thus face a major challenge in trying to emerge regenerative approaches.

So if we’re really serious about promoting the emergence of regenerative approaches, we need to develop a new, alternative business ecosystem that provides a container in which this emergence can happen. 

 

Bennet A. Zelner (Ph.D., University of California, Berkeley, 2001) is a professor at the Robert H. Smith School of Business.  His primary interests include inclusive models of economic development, distributed governance, regenerative economics, and mental healthcare delivery. 

What Businesses and Investors Can & Can’t Discuss: Six Guidelines for Business-Investor Conversations

What Businesses and Investors Can & Can’t Discuss: Six Guidelines for Business-Investor Conversations

By Jenny Kassan and Michael H. Shuman

What kinds of conversations can a business owner have with potential investors without breaking the law? Over the past year many local investment advocates and practitioners have sought our advice in answering these questions, and this blog attempts to provide some answers.

The law has been rapidly changing in this area, so not all our answers are crystal clear. But below is our best effort to summarize what’s permissible for individuals or groups that wish to have conversations about the possibility of investments in person or online. (We do not cover here new rules that apply to “pitch sessions” before groups of investors.)

(1) Public Conversations Unrelated to Investment – Green Light

The First Amendment protects free speech, including conversations between businesses and supporters. If you’re a fan, customer, or mentor for a business, you can freely talk about anything unrelated to investment.

Once the conversation shifts to investment, however, caution is needed because such conversations are regulated under state and federal securities law. Securities regulators consider any conversations between businesses and potential investors about potential investments, whether one-on-one, in group conversations, or via public platforms, to be an offering of securities. And unless or until you jump through the appropriate legal hoops for a securities offering, you cannot have such conversations.

If you run a web site encouraging conversations between businesses and supporters—say a mentorship platform—you might want to post disclaimers that the conversations should not touch on any potential investment opportunities. Better still, you might actively facilitate the conversations to prevent any violations.

(2) Private Conversations on Investment – Yellow Light

If a business has an informal conversation with a potential investor about a potential investment, this conversation may fall under the definition of a securities offering. A private conversation like this is often legal without the need to do any particular filings or make any particular disclosure. However, the details of what is required vary quite a bit depending on various factors such as what state the potential investor is in, what is being offered, and the potential investor’s wealth and income. Before actually offering an investment opportunity, even privately, it’s important to work with an attorney to determine what rules apply.

Does this mean that any conversation that even mentions an investment opportunity would be considered a regulated securities offering? Not necessarily. A conversation in which an entrepreneur mentions the possibility of raising funding in the future and does not mention any details about the investment offering (e.g. the size, the terms, the timing) is less likely to be considered a securities offering. Unfortunately, the line between an unregulated conversation and a securities offering is not well-defined under the law. Hence the yellow light.

(3) Social Mixers Involving Businesses and Investors – Green Light

Unstructured social gatherings among potential investors and business owners are fine as long as specific investment opportunities are not discussed. The original conception of LION, the Local Investment Opportunity Network of Port Townsend, Washington, was to deepen relationships between local investors and local businesses, to facilitate the possibility of future investments.

(4) Investment Clubs – Yellow Light

Groups of investors are welcome to come together, form a club, and collectively invest. They can have robust conversations about potential investments among fellow investors (but not potential investees). The presumption also is that members do not pitch one another to invest in their own businesses.

As soon as the club enters conversations with outside businesses about potential investments, the federal and state rules apply.

(5) Open, Online Conversations About Potential Investments – Red Light

Generally, an online public platform cannot host free-wheeling conversations between businesses and potential investors. This is regarded as facilitating general solicitation. And the host might be considered a broker-dealer, which would mean that it would have to register with the Securities & Exchange Commission (SEC), or under state law, as a broker. Some states are very strict about what constitutes a broker-dealer. One business was shut down by the state of California for hosting a platform that did nothing more than facilitate private investments for a flat fee.

But the next point offers a potential exemption for platforms that wish to help businesses “test the waters” (TTW) with potential investors.

(6) “Testing the Waters” Conversations in Preparation for an Investment Crowdfunding Campaign – Yellow Light

The SEC recently announced a new Rule 206 that permits businesses planning to raise money through investment crowdfunding to “test the waters” with potential investors. Participating businesses effectively must announce their interest in crowdfunding, agree to various disclaimers, and then conversations can begin.

But there’s a catch: If you meet a potential investor through public testing the waters activities, and then decide not to do a crowdfunding campaign, you may not be able to ask that person privately to invest in your business later. Thanks to little-appreciated rules around “integrating” separate offers, you cannot engage in general solicitation now, meet a bunch of new people, and then pitch them with a private offering later.

It’s important to point out here the difference between public and private offerings. Public offerings, like investment crowdfunding, allow you to advertise to the general public. Private offerings can only be made privately through one-on-one conversations. One of the virtues of the LION approach is that it is a legal way of developing relationships with people who you might be able to approach privately about a potential investment.

So if you’re a business seeking capital, the only way you can transform an investor you met through a public TTW discussion (a precursor for a public offering under Regulation Crowdfunding) into a private investor is by developing a substantial relationship with him or her after the public solicitation round. If someone you met online becomes your best fishing buddy, for example, you might be able to pitch him privately.

The good news is that if you only are pitching accredited (that is, wealthy) investors after your crowdfunding campaign, you can use Rule 506(c) to pitch them. Under this rule, public advertising is permitted and all investors must be accredited and their wealth or income status must be carefully established. If you want to also pitch unaccredited investors and include people you met through public solicitation, you will have to stick with investment crowdfunding going forward.

There’s one other possible opening that’s useless now but could be useful later—and that’s the newly announced Rule 241. It’s like Rule 206—permission for public “testing the waters” conversations with appropriate disclaimers—except that businesses do not need to announce that they are only interested in crowdfunding. All kinds of investment options, public and private, could be discussed. The problem is that the SEC did not preempt state laws that mostly prohibit such conversations. If you want to lobby your state to harmonize its laws with Rule 241, then this option could be helpful—especially to community investment groups having preliminary conversations with local businesses.

We should say, finally, that we are explaining the law, not defending it. Whether these legal rules are sensible is another blog for another day.

What goes on in the heads of investors?!

What goes on in the heads of investors?!

As an entrepreneur, do you ever wonder what investors think about and care about? Do you wish you knew what they are looking for?

The graphic above comes from a brainstorming session by a group of investors about what is important to them when deciding what to invest in. Specifically, this is a group of investors that we have convened in a due diligence learning group.

Here are some other takeaways from their meeting:

  When we shift money from Wall Street to Main Street we are shifting a power balance and we are directly impacting our communities for the better. As such, we place importance on the health of the investor, the community impact, the inclusivity of the project, and we look for ways to help entrepreneurs win. We consider the impact of the project on the community and the planet along with the potential return that we might make on the investment.

  We consciously question the traditional structures and processes that have excluded so many from access to capital and opportunity. Perhaps an issuer hasn’t raised money before and doesn’t have a track record of previous exits. Do they have other ways to demonstrate responsibility, tenacity, and a healthy mindset? Consider those instead. Be creative. Be supportive.

Would you like to hear more about what is important to these investors and maybe join them in deploying capital (even if you only have a little bit to invest!)? We invite you to join our FREE Due Diligence Learning Cohort, a series of interactive discussion sessions designed to take the mystery out of direct investing. Angels of Main Street Community Manager Amy Short, a successfully exited entrepreneur and investor, is hosting this six week learning opportunity and we encourage entrepreneurs and investors alike to attend. Throughout this series we will be analyzing an offering by Pacific Northwest Rural Broadband Alliance. Meetings are held on Mondays at 5 PM Pacific/8 PM Eastern from Monday, November 1 – Monday, December 6.

This is a free, open to all, inclusive learning experience. There is no requirement, expectation, or pressure to invest in the Pacific Northwest Rural Broadband Alliance offering, although everyone is welcome to do so if they determine that the investment opportunity is a match for themselves and their own goals.

If you are interested in joining, please reach out to Amy Short at amy@jennykassan.com to be added to the group. We have completed three of the six calls of the series, and if you are interested in joining on Monday, November 22nd, we would love to share call recordings and resources from previous calls.

What if I told you the only thing standing in the way of large-scale prosocial economic development was you?

What if I told you the only thing standing in the way of large-scale prosocial economic development was you?

Few people know about the potential of Investment Crowdfunding to save the middle class and bring back the unique character and charm of our individual states, cities, and towns.

Investment Crowdfunding is a newer tool that allows the American people to fund the innovations and enterprises they want to see in their communities and in the world.

Crowdsourcing itself is not new. Virtually every society has developed some type of crowd sourced solution to economic scarcity, such as micro-lending groups and cooperative business practices. But prior to a national model like Regulation Crowdfunding, it was difficult to have broad coverage of high impact solutions.

Today, we want to begin in earnest the discussion about the use of Investment Crowdfunding in our states, cities, and towns to bring about enterprise solutions and job creation from within those places. We are talking big. We are talking about a path to save the middle class on our own, community by community, without interference from Washington or Wall Street.

Our case study will be the newly launched Crowdfund Montana platform and the Pacific Northwest Rural Broadband Alliance (PNWRBA) offering.

Montana is known for many things: breathtaking vistas, a rugged can-do spirit, and really terrible internet service.

PNWRBA is a company that was co-founded by a native Montanan, Elvis Nuno, who returned home after receiving an education and professional experience in the telecom and wireless ISP industry. Elvis has specialization in network engineering, automation, and cloud engineering, and together with co-founders Kevin Mesiab and Jacob Dobie, is on a mission to bring affordable and reliable internet service to Montana and other rural states.

To kick things off, there will be an online launch of Crowdfund Montana and the PNWRBA offering on Wednesday, October 20th from 12 – 1 PM Mountain Time. Please join us for a discussion about taking our economic health in our own hands and a lively Q&A session. Click here to register.

 

Next, the Angels of Main Street Due Diligence Learning Cohort featuring Pacific Northwest Rural Broadband Alliance will be held on Mondays at 5 PM Pacific Time/8 PM Eastern Time starting Monday, November 1st to Monday, December 6th. Angels of Main Street Community Manager Amy Short, a successfully exited entrepreneur and investor, will host a series of interactive discussion sessions designed to take the mystery out of direct investing. This group learning opportunity will flow as follows, based on a 5-6 week schedule with one Zoom-based 90 minute meeting per week. Changes to the schedule will be made when necessary to suit the emergent nature of the group learning experience:

Week 1: Introductions: topic of due diligence, principles, methods, and introductions among members of the group

Week 2: Review of offering: Group goes through the offering together. All documents are available online at https://crowdfundmontana.com/campaigns/uqipv02

Week 3: Review of offering: Issuer (Pacific Northwest Rural Broadband Alliance) goes through the terms of the offering with the group and answers questions

Week 4: Review of offering: Securities lawyer and CEO of Crowdfund MainStreet, Michelle Thimesch, goes through the offering documents with the group and answers questions

Week 5: Group suggests further questions for issuer, and if ready, group wrap-up

Week 6: Additional answers to questions and group wrap up, if desired

There is no obligation to invest and the conversation is open to EVERYONE! Come join us and get inspired to direct your hard earned savings into the prosocial solutions you long for. Contact amy@jennykassan.com to join this inclusive learning cohort.