The Oregon nonprofit Regional Accelerator & Innovation Network (RAIN) is launching a program to expand access to capital for small businesses and startups in rural communities through a partnership with the equity funding platform Republic.
The initiative is being called RAIN Cap and it is in response to the capital needs of entrepreneurs across the state, said RAIN Executive Director Caroline Cummings.
With this program, entrepreneurs will be guided through a process with the RAIN team as well as access to software from Eugene-based Palo Alto Software for business planning and financial forecasting. Once completed, entrepreneurs should be ready to go to Republic and create a regulated crowdfunding campaign on that platform.
These campaigns will be gathered on an Oregon-specific page within Republic’s platform.
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RAIN is funding this new initiative with a $748,833 grant from the U.S. Economic Development Administration as well as $193,095 in matching funds from several rural cities and counties that work with RAIN on economic development.
“We track Entrepreneurial assets, and when we find gaps we fill them,” said Cummings. “The way we work in Linn County is different than in Grant County, but the common theme across the state is these companies feel stuck in the middle. They can’t get traditional bank loans and they may not ever qualify for venture financing.”
The group surveyed 600 entrepreneurs it has worked with, and 83% of those raising funds are unable to secure traditional loans or venture financing, she said.
What Republic offers is another option. The company is a platform for regulated equity crowdfunding. Through the platform, non-accredited investors can back private companies that have been vetted and pass a due diligence threshold. Under current regulations companies can raise up to $5 million on such platforms.
RAIN expects entrepreneurs it works with to fundraise in the $50,000 to $500,000 range. The initiative includes a lot of technical support upfront such as financial literacy education on how to create profit and loss sheets as well as forecasting. It will also help entrepreneurs understand how much money they actually need to raise — an element that many founders frequently underestimate, said Cummings.
Some of the first businesses RAIN is taking through this program include breweries, consumer product companies and tech firms.
For Republic, this pilot program fits perfectly into that company’s mission said Chuck Pettid, head of Republic retail.
“When we came out five and half years ago the core mission was the serve the underserved founder,” he said, adding this can be by gender or racial demographics but also residents of rural communities. “They don’t have access to capital. They need an outlet and that is what we are here to serve — the ideas and companies that are being built are just as great in Sweet Home, Oregon.”
Republic has worked with other partners such as 500 Global on similar education programs to help potential issuers, said Pettid. These local partners, like RAIN, understand a community's needs and the trust and relationships needed.
Oregon RAIN works in 18 cities and four counties, all in rural areas.
“People are told to go to Eugene or Portland for help. We go to them,” said Cummings.
Once the platform launches it will also allow Oregonians to invest in their neighbors. Companies interested in participating can fill out an online intake form. For anyone interested in investing, the group has an email sign-up for once the first deals are posted. Previous workshops on this new program are available on the RAIN YouTube channel.
At least two young Oregon companies have already turned to the Republic platform for equity crowdfunding. In October, Bend-based sex tech company Lora DiCarlo closed a $1.7 million round. In August Portland marketing software maker Customer.io maxed out a campaign at $5 million.
