Why our first closing matters & why it’s not the end

RSVP for our Celebrating Success in Raising Community event on June 5, 5:30 – 8:30pm.

When we created the terms for our Community Investment Offering we included what is often called a “first closing”, which is an early close of part of a financing round that commences with the agreement of all the parties involved. We set the amount of our first closing at $500,000. The basic deal was that every investment we received before reaching $500,000 in total investments would go into an escrow account held by Presidio Bank. We wouldn’t be able to access any of that money until we raised the full $500,000 and the escrow closed. If we failed to raise the $500,000 by September 24th, 2013, then Presidio Bank would refund everyone’s investment. We did this to ensure our investors that we wouldn’t use their money until we raised the minimum capital necessary to make our grocery store project a viable reality.

We reached the $500,000 target on May 17th and are now in the process of requesting permission from the California Department of Corporations to close the escrow held by Presidio Bank. Once the escrow is closed, the funds will be transferred to us and we’ll have access to the capital. This first closing is important to our project’s development in three ways:

1. It highlights the momentum we’re building through our grassroots Community Investment Offering campaign. As the halfway mark to our total raise, the first closing marks a key milestone in our progress and validates that we have the ability to achieve our goals. We’re celebrating this achievement at an event on June 5th at the Kaiser Center. RSVP for the event here.

2. It gives us a solid foundation and track record that we can use to pursue larger financing opportunities from institutional investors and foundations that wouldn’t consider financing our project if we didn’t now have $500,000 of our own money to bring to the table.

3. It gives us much needed funding to cover our administrative, legal, planning and marketing expenses for the next six months. Our plan is to put $100,000 toward our budget for the next six months and to put the remaining $400,000 in an interest-bearing savings account.

While the first closing is an important achievement that, in many ways, tips the scales for our project, the first closing is not the end of our fundraising efforts. Our total estimated project budget is $3M. In order to secure a larger loan of $2M, we need to raise a total of $1M through our Community Investment Offering. Which means that we need to raise another $500,000.

As of the writing of this post we have actually raised about $560,000. And we’re likely to reach $600,000 by the end of May, leaving us to raise $400,000 more in order to secure the loan. At the current rate that we’re getting investments (boosted by the confidence created by reaching our first closing), plus a couple larger institutional investments of $50,000-$100,000 each, we will likely raise the full $1M by the late Fall. If that timing happens, we’ll be on track to break ground in the Spring of 2014 and open our store in the Fall of 2014.

If you’re a California resident, you have the opportunity to become a Founding Shareholder in our community enterprise. And if you invest by May 24th your investment will matched by a group that has put up a $50,000 match offer.

Boost Your investment Power Via a $50,000 Share Match

Buy shares before May 24th and double the impact of your investment.

In February we successfully met a $25,000 Share Match. But far more people wanted to jump on the opportunity to double the impact of their investment than the match could support. Because so many people were interested in boosting their investment power to generate even more investment dollars for our grocery enterprise, we have secured $50,000 from a group of investors to put up as another (bigger) Share Match offering.

Every share that’s purchased in our local business by May 24, 2013 will be matched by an additional share purchased by these investors. The investors will match up to $50,000 in total shares. This means that a $1,000 investment will generate another $1,000 investment. A $2,500 investment will generate another $2,500 investment. You get the idea: double the impact of your investment by purchasing shares before May 24th.

We only have 2 weeks to meet this match. Help us build momentum toward creating a grocery store in West Oakland that will serve 11,000 families.

Invest locally.
Make a positive social impact.
Earn 3% annual interest + 1% annual store credit.