The following article ran in the November issue of Bicycle Retailer & Industry News.
ASHEVILLE, N.C. (BRAIN) — Kitsbow Cycling Apparel has emphasized community since relocating three years ago from California to the tiny textile town east of here in Old Fort. From helping with a mural project celebrating efforts to desegregate schools in the South to creating living wage jobs, Kitsbow quickly became a neighborhood business leader.
Now it’s further weaving itself into the community by announcing in September it’s gauging interest in a regulation crowdfunding round of financing through Wefunder, an online platform that connects start-ups and early-stage companies to investors.
“One of the benefits for a company like Kitsbow, as well as enabling them to raise from their own customers and community, we can put them in front of Wefunder’s investor base, and they’ve got some investments from our investment base as well,” said Jonny Price, vice president of fundraising for Wefunder. “Typically, a company might pull in two-thirds of the capital from people they bring to the round and one-third from the existing Wefunder investor base.”
Wefunder allows investments for as little as $100, with the average total investment being $500,000. An SEC change in regulation crowdfunding laws last year allows a company to raise up to $5 million per year.
Price said Wefunder has supported more than 1,000 companies since it started in 2012 and funded $500 million in investment volume. It has 1.5 million registered users, averaging two to three times year-over-year growth.
Cycling and outdoor companies using Wefunder for community rounds include Beno e-bikes, EVELO e-bikes, LIVSN outdoor apparel, and Boaz Bikes e-scooters.
Kitsbow announced in January it would become employee-owned, with a majority of the stock in the hands of employees. Through a revenue-share loan structure, regular payments will come back to the investor — even if the company is not profitable — from revenue. And that amount can go up or down, depending on the company’s quarterly revenue, aligning loan repayment to business cash flow.
“I was a venture capitalist. I have raised or helped entrepreneurs raise somewhere between $100 million and $200 million over 25 years,” said Kitsbow CEO David Billstrom, who added that because of SEC regulations, he can’t comment on Kitsbow's investment terms. “And in the past, I did all of it the same way, which is selling ownership in the company. Stock. And this is not that.”
Billstrom said it’s enticing for average people to invest small amounts into companies that are in their community, that they believe in, or know a lot about. “If you’re an experienced restaurant person, you can invest in a restaurant if you have this platform because you can look at their business plan, even if the restaurant is in a different city. You don’t have to be wealthy. You just have to know about restaurants. Or you can say, ‘I want to invest in my community because I live nearby and I want there to be jobs in my community,’ which is the situation for many with Kitsbow.”
