Equity Endeavor set out to help startup businesses raise money through its equity-based crowdfunding site.
And although that practice has been approved by Congress and signed into law by President Obama as part of the JOBS Act, equity-based crowdfunding still isn’t allowed. That’s because the U.S. Securities and Exchange Commission has not yet signed off on the practice and provided the rules to regulate equity based crowdfunding. Those rules are expected to go into effect on Sept. 23 and the SEC is currently seeking comments on them. Angellist, a site that helps tech startups find investors, thinks the new rules are too complicated and will hurt startups. Equity Endeavor decided to go a different route.
“We wanted to create a more efficient ecosystem for funding startups but we couldn’t wait for the government to come up with its regulations,” said Eric Sonnier, co-founder of Equity Endeavor.
So the startup company did a pivot.
“Out goal is to help small businesses,” said Broderick McClinton, the site’s other co-founder.
So they decided to focus on rewards-based crowdfunding for local businesses. They plan to launch this fall with five companies each in Austin and New Orleans.
McClinton and Sonnier are now both Harvard Business School students who will graduate next spring. They received a small grant from Harvard to work on their startup. They’ve split their time between Austin, where they have work out of Capital Factory and New Orleans. Sonnier graduated from the University of Texas at Austin and McClinton graduated from Tulane University in New Orleans.
Right now they are looking for businesses to try out their site in Austin and New Orleans. The businesses must be locally owned and looking to raise between $4,000 and $40,000. Although rewards-based crowdfunding sites like Kickstarter, Indiegogo, RocketHub and others already exist, Sonnier said they felt like a void existed for a crowdfunding site focused on supporting local businesses by a locally-focused crowdfunding site.
“It’s very hard on these national markets to contribute to a small business in Austin, Texas,” Sonnier said.
The whole focus is on helping local businesses reach their communities and expand their customer support.
“It should be just as easy to raise money in Austin, New Orleans and Kansas City as it is in Silicon Valley,” McClinton said.