How does Small Change work?
Small Change is a real estate investment crowdfunding platform. Now that’s quite a mouthful, but simply put it means this – we match investors with developers raising funds for transformative real estate projects, to make better cities everywhere.
We do this by using some securities regulations which are known as Regulation Crowdfunding (Reg CF) and Regulation D (Reg D), sometimes independently, and sometimes together as “side-by-side” offerings. These regulations prescribe how we can help raise funds for developers and the rules we must follow.
Is my project ready to list on Small Change?
We assess a number of criteria.
First we want to make sure your project fits our mission. We decide that based on your responses to our Change Index survey.
Next we quickly review the intent of the project, and the project finances. If these are compelling, we’re ready for a deeper dive.
And finally, we want to know a little about you. We’re looking for developers who have a great project idea and have the tenacity to complete it.
You’ll get a quick response if you complete this form. Based on your submission we’ll say go or no. If it’s a go, we’ll guide you through creating your business plan, the required disclosure documents and other requirements as described below. If it’s no, we’d love to hear from you again, whether you develop your project further or move onto another one.
How can I see if my project fits the Small Change Index?
What if my project is in an Opportunity Zone?
Opportunity Zone or not, we need to assess your project based on a variety of criteria – whether it fits our mission and whether the business plan makes sense and whether your project will be ready to break ground soon. Complete this form and we’ll get right back to you.
What will I need to prepare?
If we like what we see, we’ll prep and send you a listing agreement and then we’ll get going.
Next there’s the disclosure packet.
You’ll need to complete the business plan form thoughtfully. It’s the meat of your disclosure packet. Along with that you’ll need to finalize your project budget and operating finances, decide on what to “offer” investors, and complete an operating agreement. You’ll also need to incorporate (we can help you with that) and complete financial statements for your company (we’ll show you how).
And of course we’ll need some first-class visual materials to post your offering online.
Make a video. We’ll provide a template storyboard. Take 50 fabulous photos of your project and the neighborhood. Make sure they are landscape format and at least 1MB each. And send us a high quality photo of you.
And with all of that we can go live!
What does it cost to raise funds on Small Change?
You’ll pay two fees per campaign. The first is an on-boarding fee which covers the cost of getting you ready to go live. The second is an offering fee which covers the cost of raising the funds. Simply put:
- On-boarding fee: $2,500
- Reg CF offering fee: 6.5% of amount raised
- Reg D offering fee: Fixed negotiated fee
If you conduct a side-by-side raise (Reg CF + Reg D), then your offering fee will follow suit and be a combination of the two offering fees above.
We include a lot in our on-boarding fee. Our goal is to get you ready to go live. We’ll provide:
- Assistance with preparation of the Form C and disclosure packet
- Legal templates for LLC agreement, investor agreements and more
- Compliance review of your business plan narrative
- Form ID filing and access code generation
- Forms C and C-U filings
- Set up of bank account ready to accept investor funds
- Creation of online offering page
- Guidance on creation of appropriate marketing materials
Also include are 5 investor verifications if you are offering Reg D, and monthly bank account fees. There are a few more costs that you should count on. Bad actor reports are required as are financial review reports if you are raising over $107,000. Marketing is optional but recommended. And you might want to make a video. You can download a list of anticipated costs here.
When should I incorporate my company?
We’ll help you to incorporate your company for a slick, end-to-end offering process.
But take note. Our disclosure packet is a suite of templates that are built around a Delaware operating agreement. We’re going to provide this to you free. If you incorporate in another state, or with a different operating agreement, you’ll have more work. You’ll need to update our templates to match your operating agreement.
When you are ready, click here and complete this form.
When should I apply for a background check?
How long will it take for my offering to go live?
This really depends on you more than us. We’ll follow this timeline:
We need a week after you’ve submitted this first form to review whether your project is a fit. We’ll plan a first interview upon listing approval
We’ll need a week to prep materials after you’ve submitted your business plan.
Once you’ve completed the disclosure packet, incorporated and provided all the information necessary along with marketing materials, we need another two weeks to apply for access codes to file the offering, open an escrow account, post the offering on line, register with the SEC and go live.
The rest is up to you.
How long will it take to raise funds?
That depends on how much you are raising, on what you are offering investors and most importantly, the quality of your marketing materials and how engaged you are in the process. Reaching out to your crowd (while following the rules, of course) is critical to a successful raise.
In addition, there is a regulatory requirement that a Regulation Crowdfunding offering must remain live for a minimum of 21 days before closing.
I’m ready to get started …
If you’re ready to get started now, follow the link to this form, the first step in our listing process. We’ll collect some background information and assess your change index. Give us a moment to review it all and let you know if your project is a fit for Small Change.