Open Source: Crowd investing heats up
For most of the past century, the federal government barred all but higher-end earners from investing in private companies, including startups, fearing the general public wasn’t financially secure or aware enough to withstand the risk.
But a series of recent rule changes has opened up Shark Tank-style investing to the masses, and North Carolina founders are beginning to reap the benefits.
“It’s allowed people who want to support me, but who don’t have a lot of money, to still feel like they’re contributing,” said Brittany Barreto, founder and CEO of FemHealth Insights, a Raleigh-based startup that focuses on women’s health technologies.
On Thursday, Barreto and other local founders spoke about crowdfunding’s rise during a panel at the Capital Club Building in downtown Raleigh. According to data from the U.S. Securities and Exchange Commission (SEC), North Carolina startups raised just under $550,000 from crowd investments in 2017, and the cumulative total reached $19 million last year.
“We’re still small in terms of dollars raised,” said Will McGuire, CEO and founder of Incolo, a Raleigh-based firm that helps startups connect with the public. “But in terms of the growth rate, we’re getting faster. I often say, in North Carolina we might be one of the last to the table to do something, but we normally do it right.”
In May 2016, a provision in President Barack Obama’s JOBS Act removed an investing barrier to non-accredited investors, individuals who earn less than $200,000 a year or whose net worth is below $1 million.
Under the new rules, non-accredited investors earning $107,000 or more can invest up to 10% of their income, while those making less can invest at least $2,200 a year. This change has allowed customers to show their support in a new way, said David Shaner, CEO of Offline, a Raleigh-based members-only restaurant club.
“When a crowdfunding investor is investing in your business, they’re not just doing it for the equity,” he said. “They’re doing it because they want to support your business.”
Offline raised $2 million on Wefunder this summer from more than 450 investors. Many who left comments on the company’s campaign page sounded more like fans than grassroots venture capitalists.
Meta is in Durham
Facebook’s parent company, Meta, confirmed rumors it has office space in the North Carolina Triangle, specifically at the American Tobacco Campus in downtown Durham.
While the actual job figures aren’t much — Meta hopes to eventually employ around 100 engineers at the office — this news adds to the list of major tech firms coming to our community. Google expanded here within the past two years. Apple has, too, with a new campus on the way.
VinFast will be in Chatham (soon?)
VinFast, the Vietnamese carmaker looking to break into the U.S. market, says it can “move forward” with initial construction on its auto plant in Chatham County after the N.C. Department of Environmental Quality issued the company an air quality permit.
This week, the company reiterated its target to have the facility operational by the middle of next year. Seems like an ambitious timeline, but VinFast has been nothing if not ambitious.
The company hopes to employ 7,500 people at its Chatham facility by 2028. Getting the facility built is an obvious first step.
Avaya is bankrupt (again)
The beleaguered Durham-based telecommunications company Avaya filed for Chapter 11 this week.
The company says its restructuring plan will help eliminate more than 75% of its debt, though shareholders in the public company might be out of luck as Avaya stock might be worthless in the end.
The New York Stock Exchange delisted the company following its bankruptcy filing. It’s the second time in six years Avaya has entered bankruptcy, and it comes amid federal and internal investigations into its financial reporting.
Tough times for the company, which will continue operating as it (and judges) sort out its affairs.
Short Stuff: Fidelity won’t stop hiring
Fidelity Investments says it will add 620 new jobs in North Carolina over first half of 2023, adding to the company’s swelling Triangle-area workforce that grew by more than 2,500 last year.
And in more startup funding news, the Durham-based car servicing startup Get Spiffy announced a $30 million round this week.
National Tech Happenings
Tesla has agreed to make some of its chargers accessible to all electric vehicles.
In other Tesla news, a union in Buffalo has accused the company of firing workers in retaliation to their organizing efforts.
The creator of the WallStreetBets subreddit has sued Reddit, alleging the social media platform tried to monetize the brand he founded. WallStreetBets became famous a few years ago for driving certain meme stocks (which they call stonks) like GameStop to absurd heights.
Here’s how GameStop’s stock/stonk price is doing today:
Thanks for reading!
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work.
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