Has a whole city ever equity crowdfunded a successful startup? Equity crowdfunding is a brand new thing, right? No, it’s far from new. In fact, one of the most successful crowdfunded businesses ever created was started in 1919 in a town of 30,000 people for $500. It now is worth nearly $2 billion!
The business was founded by a guy who asked his employer for $500 to purchase equipment to get started. Two years later, five guys had become passionate about building the company, so they decided to get help from the whole community. They formed a non-profit corporation and started looking for investors. They initially raised $5,000 by selling 1,000 shares at $5 per share.
During many ups and downs over the years, the organization raised capital four more times in a similar fashion and eventually became a public corporation. The most recent “crowdfund” raised $64 million from 269,000 people at share prices of $250 each (99% was raised online)! The business remains community-owned by 360,584 passionate stockholders. No one is allowed to hold more than 200,000 shares (approximately 4% of the 5,011,557 shares currently outstanding).
As of 2015, Forbes estimated the value of the enterprise to be nearly $2 billion, and the business is still located in the same small city (now a population of approximately 104,779). Some really serious fans may have guessed by now that the organization is the Green Bay Packers, and the guy who started the business was Curly Lambeau. Granted, they did take 96 years to reach a $2 billion valuation, and a football team is a little different than today’s typical startup. However, it’s still a fantastic example of what a community can do when lots of people pitch in to fund an idea.
Somehow, most startup communities around the country (including ours) have decided that spreading the entrepreneurial risk among lots of people can’t be done. I’ve repeatedly heard leaders in the local entrepreneurial community say “don’t take investments from lots of small investors; if you do, venture firms won’t invest in your company.” I don’t agree. For one thing, I’ve raised venture capital, and, at the time, I had 52 shareholders. With the right agreements and structure (and treating everyone fairly), the risk of shareholder issues is minimal. Also, less than 0.018% of companies raise venture capital anyway. So, who cares!
Most startup communities have fallen into what Brad Feld calls “The Old White Guy Problem.” A handful of wealthy individuals become the gatekeepers of entrepreneurism. When this happens, entrepreneurs feel that their only option for capital raising is to find a “rich angel” to swoop in and solve all their problems. This may work for a few people; however, it doesn’t work to fund lots of startups and a vibrant startup community.
The best way we can accelerate our startup community is teaching entrepreneurs how to raise capital in lots of small chunks and encouraging the entire community to invest small amounts in lots of startups. Metro Startup Launcher is doing our best to make this happen.
Our community has 43 times the population of Green Bay at the time that the Packers got started. How about we crowdfund 43 companies that hit a $2 billion value? At the very least, we can crank our three or four! Let’s do it!