NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, August 6, 2014

Looks like there’s a growing interest among social enterprises in a capital-raising method called Direct Public Offering (DPO).

Consider Cutting Edge Capital. Launched four years ago, the Oakland, CA,-based company is really hitting its stride. It has facilitated 11 DPOs, raising just over $5 million–with 25 in the pipeline.

So what exactly are these babies? Andy Bamber, Cutting Edge Capital’s business development manager, calls it “securities-based crowdfunding.” Through DPOs, companies sell securities directly to a lot of unaccredited investors. It’s a way to raise capital without all the regulations, underwriting and expense required for a regular IPO. In some cases, there’s a cap of $1 million; in others, there’s no cap.