Some people know from an early age that they want to be entrepreneurs, while others fall into business without even trying. Jenny Kassan, CEO of Cutting Edge Capital in Oakland, California, puts herself in the latter category, having primarily spent her early years working at nonprofits. “When I first got out of law school, I’d never been involved in any kind of for-profit business, except when I worked at an ice cream parlor and pizza restaurant as a teenager. I didn’t know much about enterprise back then,” she admits.
The SVN-SVI Connection
Kassan’s journey from ice cream and pizza to equity crowdfunding will put her in good stead at the 19th annual Social Venture Institute, taking place September 10-14, 2014 at Hollyhock on Cortes Island, British Columbia. This will be Kassan’s first time attending SVI at Hollyhock, though she says, “I’ve heard for so long about how great it is” from fellow members of the Social Venture Network, an original and continuing co-presenter of the Hollyhock conference.
Kassan has found a great deal of value from her membership in SVN, and can expect to find a like-minded crowd awaiting her at SVI. “SVN feels like a great tribe of people – when you walk in as a social entrepreneur, you feel like you’ve found your home. It feels great, because you can be in other arenas like the world of finance or others where you don’t feel that way. Everyone’s really friendly and generous. The ethic of giving, not just talking to the people you know, makes me feel really good to be in that community. And of course, I’ve made some wonderful connections with people through that [network] too.”
Helping Small Business Succeed
Though her path wasn’t direct, Kassan eventually learned that through business, there are plenty of opportunities to help make the world a better place. Fresh out of Yale Law School, Kassan joined The Unity Council, an entrepreneurial community development corporation that works towards the social, cultural and economic development of a largely Latino neighborhood in Oakland. “One of my jobs was to work with small businesses,” Kassan recalls, “and I saw how they were struggling, and how what they’re going through is so different from large businesses – they don’t have resources, and the playing field is so tilted against them.”
Always a champion of the underdog, Kassan thus became more interested in small business and social enterprise. “All these laws and policies and programs, even the ones designed to help [small businesses], really don’t work — they’re just struggling like crazy,” she says. After 11 years at The Unity Council, Kassan joined a small law practice serving the social venture community, and very soon thereafter, was asked to run the firm. “Suddenly, I became a small business owner – I learned a lot very quickly!” she exclaims.
DPO’s – An Innovation in Impact Investing
Four years ago, Kassan’s law firm launched Cutting Edge Capital, a related consulting firm focused on facilitating alternative funding structures for mission-driven enterprises. Forbes Magazine recently profiled Cutting Edge Capital’s use of Direct Public Offerings (DPOs), an innovative form of financing social ventures through investment crowdfunding. “DPOs provide small enterprises with access to patient capital, and small investors a way to support local and sustainable companies,” explains Kassan.
Kassan believes DPOs are part of a systemic change, circumventing traditional investment banks’ lock on the initial public offering (IPO) market. “If you look at the financing system in our country,” she says, “it’s so incredibly limited in terms of who can benefit from it. On the business side, very few businesses can access capital on reasonable terms, if at all –angel investing and venture capital goes to less than 1% of businesses – so many [small social entrepreneurs] don’t have access.”
While DPOs have ebbed and flowed in popularity over the decades — Ben and Jerry’s did one back in 1984 — there has been a recent resurgence in their use by small businesses. Kassan and her colleagues started looking into solutions for raising community capital about eight years ago, and in the four years since Cutting Edge Capital’s launch, they have completed 11 offerings and have about 35 more in the pipeline. As evidence that they are “walking the talk,” Kassan’s company has used the DPO model twice itself – being a small business, she admits, “we go through all the same challenges as our clients do.”
Even though she “finally realized there’s more to life than nonprofits,” Kassan hasn’t totally abandoned her interest in or passion for the sector. A number of her clients, including those pursuing DPOs, are nonprofits; for example, they’ve worked with a school that generates revenue through tuition, and a community development financial institution (CDFI) looking for more ways to raise money. Kassan’s firm also has its own sister nonprofit, Community Ventures.
Looking North of the 49th Parallel
As she prepares to cross the Canadian border to travel to Hollyhock, Kassan makes sure to mention that she’s in active conversations with SVX, an Ontario-based online platform connecting impact ventures, funds and investors. Kassan’s group has its own impact investing platform, CuttingEdgeX, but what differentiates SVX is its ability to allow investors to purchase securities on the site. While SVX is focused on businesses in Ontario and is currently only open to wealthy investors, Kassan would like to see the SVX model expand across the border into an investing platform open to everyone.
As for her upcoming visit to Hollyhock, what is Kassan hoping to gain? “I’m looking forward to learning a lot and having fun and getting into a different space,” she says. With those as her goals, it’s safe to say she’ll be looking at an excellent return on her investment.