By DENNIS GRUBAUGH
A retooled “crowdfunding” law is giving Illinois companies and communities a new means to grow businesses via local investment, and more participants are expected as awareness of the measure spreads.
So says Anthony J. Zeoli, the Chicago attorney who wrote the original law and revisions to it and who is now helping companies navigate the specifics.
The law is in essence a new type of investment-based crowdfunding that allows small businesses to seek out the capital needed to do much bigger things with their companies. It’s being used in a growing number of states.
Crowdfunding has been around several years. Smaller-scale platforms like Go Fund Me allow people to seek donations for a variety of personal uses, while Kickstarter and Indiegogo offer rewards in return for donations toward an idea, charity or startup business.
However, the new law in Illinois deals with specifically investing in a company, in ways that average people have not been able to do until now.
“You’re either getting equity or you’re loaning money and getting interest and debt,” Zeoli said. “In 80 years of securities law, this is the first time that ‘normal, everyday people’ have been able to participate in this market.”
People looking for investments are generally frustrated by a market dominated by bigger players. Thirty years ago, IPOs had the potential of return of 20 or more percent and it was easier to get in on the action.
Now, a company’s equity is held in private for so long that by the time a company hits the public market, new investors “are lucky to get 5 percent over 10 years. All the money is just eaten up in this private market. You can’t touch it. You have no access to those types of investments,” Zeoli said.
Most investment in breakout companies like Uber or Airbnb is private investment.
“This (new law) actually starts to break down those barriers where normal people have access to those investments, and the companies can find customers and funding for less money than they would be paying otherwise.”
“Mainstream crowdfunding was only made legal in Illinois last year but (a 2012 federal) act paved the way,” Zeoli said. “Once the federal government allowed that kind of contract to exist, we were able to do it on the state level.”
Zeoli’s work has brought him recognition. He is a transactional attorney with a national practice and specializes in securities, commercial finance, real estate and general corporate law.
“I have a background in all the areas that crowdfunding touches on, everything from corporate work to lending to real estate to securities transactions. What was normally your private securities transaction and your fund formation I was already doing,” he said.
Years ago, he said, he could see where the evolution of business financing was headed.
“It kind of became a passion of mine over the past four years. A lot of it was a self-hobby, to get involved and get in front of this industry. One, because I think this is where this industry is going and, two, because I really have substantive input into the laws and the ways things are done and can put my unique spin on things.”
At the time he drafted the original Illinois law, about 16 other states had crowdfunding laws. Now there are 32.
“I saw the issues with the other states, and nobody here was looking into it,” he told the Illinois Business Journal. “In my naiveté I figured if I wrote it, I could get it passed. Luckily, the Small Business Advocacy Council (in Chicago) was able to lobby it and get it passed.”
Initially, Zeoli drafted what he called a “very progressive” version of the legislation.
“We had to sit in a room with the Illinois secretary of state for about nine or 10 hours and hammered out all the details, but in the end I think we have a very balanced law and certainly one of the most, if not the most, useful crowdfunding laws in the country,” he said.
The law was approved in the end of 2015 and made effective in 2016. However, the Secretary of State took eight or nine months to finalize the rules.
“So, we really didn’t have the criteria to put an offering out until October of last year,” he said. Three or four more offerings came in January this year.
“A lot of businesses have shown interest in using it. It’s been more an issue of trying to educate investors and the people living in the community about how it works. It’s not just giving money to a company and getting nothing in return,” he said.
Only a handful of businesses have pursued offerings so far, Zeoli said. One company floated a six-year debt offering, with investors getting 6 percent a year on the money they invested. Just like any other loan, there was a promissory note. Investors also got extra benefits.
“It was a health club so they got free T-shirts and free training sessions,” he said.
Two other companies set up the offerings so that investors would share in the equity and the profits as they came in. The profits are to be distributed on a quarterly basis.
By DENNIS GRUBAUGH
COLLINSVILLE — While it’s true that none of us is getting any younger, it’s also problematic for coming generations who face the challenges of a fast-growing, aging population.
Adult day programs are becoming a big part of the answer, a means of staving off more expensive nursing care.
For Lisa Brennan of Collinsville, the care provided five days a week at St. John’s Community Care in Collinsville has been peace of mind for her and a lifeline for her mother.
“Her coming here not only gives me the opportunity to continue my career, it’s also given my mom a real quality, end-of-life experience,” Brennan said.
Four years ago, Brennan moved in with her 92-year-old widowed mother, Patricia Cisczcon, to help her with chores, but it soon became apparent her mom needed specialized care.
“Once I got in, I could see Mom had more needs than I thought she did,” Brennan said. “She was really struggling. So, we had a couple of assessments done, one by the state of Illinois and one by a private insurance company. Both came back with, ‘Your mother has dementia and she shouldn’t be left alone.’ What I thought was going to be an easy solution … put us into a tailspin.”
Brennan found St. John’s after her sister saw a sign advertising one of its four support groups.
“I showed up just wanting some advice. That’s how it started,” said Brennan, who also has an 8-year-old daughter at home.
“Mom was at a point where she didn’t want to get out of her bed,” Brennan said. “We started coming here, and she is engaged. Some people say she holds court. She can’t hear very well, she’s legally blind, but she gets an audience. She’s done extremely well.”
Now 96, Cisczcon comes to St. John’s five days a week, enjoying programs from art therapy to therapy dogs. A beautician comes in on Wednesdays and lunch is provided each day. A wealth of guest visitors, games and discussion sessions put the stress on socialization. Dance Party Fridays have been a real treat for many of the clients. A large, enclosed, outdoor patio and garden is also available for functions.
Nancy J. Berry is executive director of St. John’s Community Care, which is one of the oldest of the senior care operations in Metro East and has locations in Collinsville and Edwardsville. St. John’s has both adult day and home care services.
Adult day services differ from nursing home care in the constant stress of activities.
“We are very focused on keeping our people focused with activities.” Berry said. “We have a nurse on duty if they need medications or have a medical need. Other than keeping people safe and making sure they get a decent meal, the focus is all on what can we do that’s fun and rewarding.”
Beyond the therapeutic benefits, adult day services provide a very real opportunity of keeping the older clients out of hospitals and nursing homes, which are far more expensive.
Studies released in recent years by the National Adult Day Services Association showed the average annual cost per person using adult day programs was $16,900. By comparison, a year’s worth of services from a home care aide was estimated at $44,790 and a private room at a nursing home cost an average $83,150 annually.
By ALAN J. ORTBALS
When the Midwest Cyber Center opened the door for applications to its new apprenticeship program, it had no idea what it was in for.
“The response honestly has been amazing,” said Tony Bryan, executive director of what’s known as MC2 , based outside Scott Air Force Base. “Not a day goes by that you’re not seeing an article in social media, the newspaper or somewhere on the Cyber Security Center. We knew but we didn’t understand how big it would be.”
In a four-week period MC2 received more than 300 applications. The number that will be initiated into the program will depend on the number who qualify and the number of sponsor partners that MC2 is able to sign.
The program requires people be 18 years old or older; have a high school diploma or GED; and must pass the ACT Work Keys test. Most people are familiar with the ACT that high school students take for admission to college. ACT Work Keys is geared toward testing career readiness for non-college-bound student. There are three sections that analyze reading comprehension, math skills and ability to analyze data.
“It is fairly new and I think some states have jumped in to embrace it more so than others,” Bryan said. “I think the trend going forward is that high school students will take one or the other of the ACT tests and the districts will pay for it. We require that they score a 5 across the board for all three categories. If they do, they qualify for our program.”
The apprentices will be paired with participating businesses for the 18-month program. They will work 32 hours per week at the businesses, being paid $15/hour and spend 580 hours studying via an online curriculum that is certification based.
The program is being conducted in partnership with the St. Louis Agency on Training and Employment (SLATE). So far 35 individuals have passed the ACT Work Key test. Clearent, Hussmann and Blake Technologies have all signed on to accept apprentices and Bryan said that he was working to enlist more.
ALTON – Nearly 55 teams of 216 golfers teed off to help raise $26,000 in support of an area charity through the 13th Annual Simmons Employee Foundation Golf Tournament at the Spencer T. Olin Golf Course in Alton.
All net proceeds from the event will be presented to the Foster & Adoptive Care Coalition, a St. Louis-based organization dedicated to finding homes for area children in foster care, and supporting foster and adoptive families throughout the St. Louis Metro area.