‘Democratization’ of investing: Richmond companies use technology to open investments to a wider audience | Local Business News

Historically, however, there have been boundaries and limitations on who can participate in those kinds of private investments.

“What we see all the time is there are lots of good ideas out there that don’t get funded,“ said Gatewood, a partner with the law firm Threshold Counsel. “There are strong business founders that don’t get funded. A lot of the serious and dedicated investors just don’t have the time or energy or capacity to do all that, or they have their own parameters for what they are interested in.”

“There is a very active [startup] ecosystem here,” in Richmond, he said. “A lot of good work is being done, but there are always things that are not a good fit for the usual angel investors.”

It’s a boundary that Gatewood is hoping to break down with a new venture called Round Here, which enables practically anyone to invest in startups looking to raise money.

Gatewood partnered with local software developer Michael Lamberson to create the Round Here platform. Lamberson said he’s founded several companies since 2006, and sees the Round Here site as a way to open up investments for people who have traditionally been locked out of those opportunities.

“I was tired of all the gatekeepers and being told, ‘you cannot invest in this.’” Lamberson said. “It was really a protected class that was benefiting from this kind of investing for years, but anyone can get in on it now. Businesses can be funded by their own communities.”

There are numerous so-called crowdfunding websites where people can put money into worthy causes or projects. For instance, GoFundMe is a site where people can raise money for events or to help with challenging circumstances such as illnesses. Kickstarter is a site where people can give money for creative projects such as music and films.

Platforms like Round Here are designed for people to make investments in businesses that give them a small equity — or ownership — stake in the venture and rights to a share of the future profits.

That kind of investing was enabled by changes in U.S. Securities and Exchange Commission regulations in 2016 that eased restrictions on who can participate in private investment offerings. Previously, such offerings were limited only to “accredited” investors who met certain income and net worth parameters.

Round Here is a registered funding portal with the SEC. The company introduced its platform in February.

Investors can put as little as $100 into businesses that offer shares on the platform. Potential investors can use the platform to review each offering company’s business goals, financials and risks.

Companies can register on the site to raise up to $5 million by selling shares in their business or other types of investments.

That $5 million maximum is also a recent change. The SEC regulations changed in March 2021, raising the maximum amount that companies can raise on equity crowdfunding platforms from $1.07 million to $5 million.

“It is meaningful to companies to be able to do that,” Gatewood said. “One million is real money, but $5 million is enterprise building money.”

There are still some restrictions on how much people can invest through equity crowdfunding. Non-accredited investors with an annual income or net worth of less than $107,000 are limited to investments of either the greater of $2,200, or 5% of the greater of their annual income or net worth.

Round Here is not the only the Richmond-area company that is seeking to open investment opportunities to a wider customer base.

Taylor Hoffman Inc., a Richmond-based investment management firm, has recently introduced a new venture called Avidus that enables people to invest as little as $100 to buy shares in a curated portfolio of 30 businesses nationwide.

“We are taking the same portfolio that we offer to our high net-worth investors and making it available to anyone in America for as little as $100,” said Brandon Taylor, the firm’s co-founder and CEO.

There are lots of do-it-yourself apps out there that enable people to make stock investments, Taylor said, but there are few that offer professional management options. He said the firm, which already manages hundreds of millions for high-net worth investors, wants to broaden its impact on the community by opening up investments to under-represented communities.

“No matter who you are and how little money you have, we will take that investment and invest in shares that we professionally manage,” he said.

Taylor Hoffman raised $1.35 million in 2022 in a first round of seed funding to develop its Avidus app.

“It is the democratization of professional portfolio management,” Taylor said.

“We are specifically letting younger people know and under-represented communities know that to the extent they want someone to professionally manage money for them, that we want to be that firm,” he said. “You will not get that professional invitation from anyone on Wall Street.”

Another Richmond-based company called Vint — founded by University of Virginia graduates Nick King and Patrick Sanders, enables anyone — even non-accredited investors — to buy ownership shares in high-value wine collections, along with some spirits. Since the spring of 2021, the company has completed selling shares in 14 different wine collections.

At Round Here, Gatewood said the company wants to attract numerous types of businesses to offer shares on the platform.

“Hundreds of different industries have used crowdfunding already to do whatever they need to do,” he said. That could be anything from a small food-truck business to a real estate development project, he said.

Two Richmond-based companies are now offering shares on the company’s platform at roundhere.co. Those companies are:

● equalityMD, a business founded by Justin Ayars that has an app designed to match patients with mental health providers. The company is particularly focused on connecting LGBTQ+ patients with culturally competent mental health providers that deliver inclusive, personalized care. equalityMD is seeking to raise at least $10,000 and as much as $107,000 on the platform.

“This community has unique health care concerns and a historic lack of access to care,” Ayars said. “It is a question of how do you understand a community in a way that you can create safe spaces where they can be their authentic selves. We are trying to bridge health care disparities using technology.”

“I have always seen crowdfunding platforms as another marketing tool,” Ayars said. “If you make some money while getting the word out, then great. It is a way to let retail investors become part of our story.”

● Team Excel, a digital platform founded by Richmond entrepreneur Johnathan Mayo that works with schools to improve student performance by setting up “reverse fantasy sports” programs that enable students to form teams, earn points and compete based on such metrics as academics, attendance and community service hours.

“Raising capital is hard, particularly for people for color,” said Mayo, who has founded several businesses. “There are a lot of people who believe in our mission who may not be accredited investors, but they want to see us succeed. They can invest for as little as $100.”

Team Excel also is looking to raise at least $10,000 on the platform and as much as $107,000.

“We like that they are both local, we like that they are seasoned founders, and we like that their projects are community-based,” Gatewood said. “Certainly, they are both for-profit companies that intend to make money for themselves and for their investors, but they are both focused in areas where equity and inclusion have not always been easy and still aren’t, so we like that about them.”