By Ed Zwirn
(originally published in the Sunday New York Post on May 29, 2016)
The Bedford-Stuyvesant-based store is aiming to raise $50,000 to $100,000 via new rules that allow startup companies not registered with the Securities and Exchange Commission to crowdfund securities offerings.
The new rule took effect on May 16, and as of presstime, 29 companies had applied to raise money via nine funding “portals” using the new method, mandated by 2012’s Jumpstart Our Business Startups (JOBS) act.
So far Nextdoorganics has raised $2,851.
Under the act, smaller companies like Nextdoorganics can raise up to $1 million over a 12-month period through internet offerings. Individual investors with less than $100,000 of net worth will be allowed to invest up to $2,000 in those companies. Wealthier individuals will be able to risk 10 percent of their net worth.
Nextdoorganics CEO and co-founder Cook says he is satisfied so far with the progress of his company’s offering. “I’m anticipating that within the next 45 to 55 days, we can reach our goal,” he says. “We can close the offering any time we reach $50,000 of investment.”
Investors in the offering will be buying a stake in a fund controlled by Wefunder Advisors, a subsidiary of the portal. The advisory firm will hold onto investor stakes until the company makes an official initial public offering or gets a major injection of venture capital or “angel” investing. According to Wefunder, this payout could occur in “four to seven years, if ever.”
In the meantime, Cook says he is bullish on the prospects for his startup company, which has booked some $2.5 million of revenue in the five years since it was founded, $900,000 of that in 2015.
He says Nextdoorganics has a member list of more than 1,650 for its weekly food packages, which start at $25, and that it processes an average of 300 to 700 orders each week.
The crowdfunding effort, if successful, will enable his company to expand its business of providing healthy food to urban areas well beyond Brooklyn.
“We plan to take this model and scale it through the development of new technology,” he says. The new crowdfunding rules, he says, “pair very well with the ethos of our company of community-driven membership and community-driven growth.”