By Erica Bray
If you’ve ever backed a project or business idea on crowdfunding sites Kickstarter or Indiegogo, you’ve probably received a “Thank You” in the form of swag or a product discount. But what if instead of a t-shirt you could receive something more valuable, like shares of stock?
That’s where website Chroma.Fund comes in: It connects Oregon-based startups with everyday Oregonians looking to invest in a company or project, for as little as $10 and with no stockbroker required. In exchange, investors get equity in the business.
“We’re doing something in Oregon right now that everyone in the country will be doing soon,” says Co-Founder Mike Merrill.
Merrill’s right. Chroma.Fund is in on the ground floor of what looks to be a burgeoning trend for investment in startups. New rules recently approved by the Securities and Exchange Commission (SEC) will allow small businesses to sell shares to a wider range of private investors. This ruling is expected to take effect nationwide in early 2016.
It’s a new way of raising funds that hugely departs from investing in startups as we currently know it, where only accredited investors — or those whose net worth exceeds $1 million or who consistently earn more than $200,000 per year — are allowed to invest in such private companies.
Now, you won’t have to be insanely rich to back a startup you love, or to invest in what could become the next Airbnb or Uber. Still, many experts say this new ruling will most likely benefit local businesses with a built-in fan base.
Chroma.Fund, for now, is only applicable to startups and investors residing in Oregon, as state laws there have allowed for the site’s launch ahead of the SEC ruling. “We’re very excited about the prospect of an investment crowdfunding offering that is not restricted to a state,” says CEO Marcus Estes.
Estes, 36, and co-founder Merrill, 38, have been anticipating nationwide equity crowdfunding for some time. Chroma.Fund is powered by the blockchain-enabled IPO platform, which is the same underlying technology that powers Bitcoin.
The website’s name even factored into this forethought. “The decision to have a snappy, short domain was important to us,” says Estes.
By using a “dot-fund” domain, the online business name is innovative, and that aligns well with startup thinking, he says. The company also owns ChromaFund.com, but only to redirect it to their ‘dot-fund’ (.fund) site, Chroma.fund.
“We actively decided that it’s just cooler to type fewer characters and to embrace the newer domains,” he says. Adds Merrill: “We’re a financial startup, but one that’s doing things in a fun and new way.”
The forward-thinking duo embraces the new and enjoys strategically pushing the envelope -- especially Merrill. He reached Internet fame in 2008 when he morphed into a crowdfunded human by selling shares of himself. He even changed his politics to become a registered Republican. “My shareholders thought I should,” he says “That’s been a hard one to internalize.”
In balancing quirk and creativity with serious business, the co-founders credit a trajectory of success to frequent debates that help them extract the best work from each other, and that ultimately pushes the business to greater heights.
“We’re providing businesses with a source of funding that they don’t currently have access to,” says Merrill, “and also giving investors the ability to fund businesses before they become giant corporations.”
Some of the startups featured on Chroma.Fund, which launched just this October, include a virtual-reality game, a digital comic book, and a monthly surprise toy box subscription that plays on the “unboxing” craze.
Estes and Merrill hope that by elevating financial opportunities for other startups, their own business name will soon enter the everyday vernacular as a verb.
“We love companies that become verbs, like when you ‘kick-start’ something,” says Estes. “Since we’re an investment crowdfunding site, we wanted to imagine a world where people would be ‘chroma-funding’ something.”
To learn more about this business, visit the website www.Chroma.fund.