DPOs and Investment Crowdfunding

Opportunities for small businesses to raise funds from the public have exploded in the last few years, giving rise to online crowdfunding platforms. The catalyst for this burst of activity was the Jumpstart Our Business Startups (JOBS) Act, signed into law in 2012. This legislation relaxed securities laws to enable early stage small businesses to publicly advertise their offerings. Title II of the JOBS Act, allowing small businesses to solicit an unlimited sum of money from accredited investors*, went into effect in 2013. Title III of the JOBS Act, allowing investment from the general public for up to $1 million in a 12-month period, became effective end of the 2nd quarter, 2016; Title III requires businesses to use a registered online platform to raise funds.

What about investment crowdfunding directly from your own community?

Investment crowdfunding might be right for you if…

  • You are energized by building a local following and support through word of mouth, social media, and other forms of publicity (and have the time to take this on!)
  • Your product or service is one people tend to naturally connect with and get excited about
  • A great story can be told about your business and/or product/service

Featured Case Study

Farm Power Northwest (SCOR)

When brothers Kevin and Daryl Maas sought to start Farm Power Northwest, they raised capital to buy equipment from accredited investors through private placements.

Read More

The Tools


Direct Public Offerings (DPOs) allow small, early stage businesses to sell equity directly to investors (without using technology or Wall Street as intermediaries). DPOs tend to be more word of mouth and “homegrown” than their JOBS Act peers. DPOs allow for larger sums of money to be raised from the general public than Title III, but the offering must be registered with Washington State and meet certain “merit standards.” Because State registration is a significant undertaking, and standardized forms are not available to complete the registration of a DPO, legal counsel is advised and therefore the cost of a DPO is greater than other forms of crowdfunding. Using the marketing slogan “Get a Scoop of the Action” to rally Vermonters, Ben & Jerry’s is probably the most notorious example of a successful DPO in the United States.

Washington State JOBS Act

As years passed at the federal level between the passage of the JOBS Act and activation of Title III, allowing the general public to invest in small businesses, Washington State got tired of waiting. In 2014, the Washington State JOBS Act went into effect. This crowdfunding legislation is a type of DPO, but does not require registration with the State. Under the Washington State JOBS Act, small businesses may raise up to $1 million in a 12-month period by selling equity to the general public; all funds must be raised from Washington State residents. Furthermore, the business itself must be incorporated or organized in the State of Washington and have limited business activities outside of the state. To seek exemption from State registration to crowdfund under the Washington State JOBS Act, a questionnaire must be completed (the form was designed to be straightforward and not require the assistance of an attorney).


Small Company Offering Registration (SCOR) is yet another type of DPO unique to Washington State. To pursue a SCOR, a relatively simple questionnaire must be completed and the offering must be registered with the State. Up to $1 million may be raised in a 12-month period from investors in Washington State. Like the Washington State JOBS Act, the company must also be incorporated or organized in the state and have limited business dealings outside of it.

An Important Note…

We’ve all heard inspiring stories of crowdfunding mega-successes in the media—but make no mistake, raising capital directly from investors using an online platform or a community-based approach is hard work. To run successful campaigns, entrepreneurs must invest considerable time and energy rallying a crowd around their businesses. It is also useful to begin with an existing local following, have a unique product and/or a powerful story that naturally attracts the attention of a crowd.

* Accredited investor is defined as: (1) An individual net worth or joint net worth with a spouse that exceeds $1 million at the time of the purchase, excluding the value (and any related indebtedness) of a primary residence; OR (2) An individual annual income that exceeded $200,000 in each of the two most recent years or a joint annual income with a spouse exceeding $300,000 for those years, and a reasonable expectation of the same income level in the current year.

Other businesses that have used these tools


More than 400 community members invested in this much-needed publicly owned general mercantile in Port Townsend, Washington.