If you’ve been to any NY Tech Day events recently, you may have heard of Return on Change, a new startup that allows every day individuals to help fund socially-conscious startup companies. Aimed at exploiting a hole in the market created by the passage of the JOBS Act, Return on Change officially launched its private beta site today.
According to a press release:
Entrepreneurs with great ideas need capital funding to jumpstart their businesses, and investors are looking to help fund the next big idea. RoC provides the online medium through which startup companies and entrepreneurs will be able to pool capital through crowdsourcing.
It’s an interesting idea, and one that could gain major traction once the JOBS Act goes into effect in nine months. Even more interesting is that Return on Change focuses on startups with do-gooder missions, and not just regular old social media companies.
Return on Change is helmed by 25-year-old Sang Lee, who previously worked at several European banking institutions, and currently serves as CEO and cofounder of RoC.
“Return on Change is a crowd investing platform for high-impact, socially-conscious startups that are really looking to find ways to change the world, or at least change the way we interact with the world,” Mr. Lee told Betabeat.
Mr. Lee said that the exact mechanisms of the platform will evolve as the SEC’s rule-making evolves. “When the legislation ships out, while companies are committed to use crowdfunding to raise investments, their issuers are not permitted to do it themselves and they have to go through an intermediary organization,” he said. “We’ll be registered with the SEC and offer a comprehensive platform connecting the right people, and we also have the mechanisms and the tools to really put yourself out there.”
The passage of the JOBS Act allows every day people to invest in startups, but most individuals don’t know how the process works. With investing, there are nuances that the platform will assist companies and individuals with, including documentation, so that investors can properly know what they’re getting when they fund the company, Mr. Lee said.
There will be no cost for startups to post their ideas up on the platform; the actual revenue model will depend on the SEC’s rule making, because they haven’t finalized how intermediaries should appropriately be compensated, he said.
Since the SEC rules surrounding the JOBS Act have yet to be finalized, tech startups can’t yet directly solicit investments, Mr. Lee said. Instead, the company is hosting a contest for the most innovative and change-inducing startup ideas. “The first 100 startups that meet RoC’s criteria will have the opportunity to win one of three $1,000 funding prizes,” reads the press release. “The company is seeking startups in the areas of clean energy, biomedical, social ventures and technology.”
Ironically, Return on Change is in its own bootstrapping phase: Mr. Lee said that they’ve acquired seed funding, but don’t yet have institutional investors. Wonder if they can use their own platform to help with that?