When the Green Bay Packers set out to raise money by selling shares to the public late last year, it was the sixth time since 1924 management had given fans a chance to own a piece of the team. But it was the first time the team had done the stock sale entirely online, with a Shopify-like cloud-based store that enabled it to manage the campaign on its own.
“How would they have done that without” that online store? said Mat Goldstein, CSO and co-founder of the company whose platform the Packers used, DealMaker. “They would have done it the same way they had done it in the 1920s, 1940s and 1960s. People would have had to mail purchase orders, mail checks, and a CFO and an army of accountants would have had to use a spreadsheet to track what had come in and match the payment to the purchase order, whether the purchaser information was completed correctly. So, you can just picture the limitation of what the companies would have been able to do without software.”
DealMaker launched in 2015 as a way for companies to conduct online retail capital raises in compliance with liberalized securities rules enacted in the 2012 Jumpstart Our Business Startups (JOBS) Act.
The law loosened rules on reporting, oversight and outreach for companies trying to raise investor funds and created a pathway for companies to use crowdfunding and other retail processes to generate capital from non-accredited investors.
“Whether it’s people buying NFTs or ConstitutionDAO, retail capital raising is part of a phenomenon that is capturing the hearts and minds of people,” said Rebecca Kacaba, DealMaker’s CEO. ConstitutionDAO is an online movement that tapped crowdsourced funding to bid on one of the original copies of the U.S. Constitution.
The JOBS Act creates three avenues for raising capital directly from investors.
Reg. D 506 (c) allows companies to sell shares to a group of targeted, accredited investors, Reg. CF lets them raise capital from individual, non-accredited investors, generally limited to a few million dollars from each investor, and Reg. A+ lets them offer tens of millions in stock each year without having to meet full registration requirements imposed by the Securities and Exchange Commission.
“We’re doing $100 million-plus offerings all the time,” said Kacaba. Structuring an online platform around the 2012 law has “really opened the door for retail to become a vehicle for meaningful capital raises.”
The Packers raise, which brought in about $65 million before it closed in February, sold just under 200,000 shares in about 175,000 transactions at $300 per share plus a $35 handling fee. Investors in all 50 states, U.S. territories and Canada participated.
The stock sale was similar to other retail capital raises but with important differences, in part because the Packers are structured as a nonprofit and the shares come with strict limits that make them more of a collectible than a chance to make money. Among other things, investors are limited to 200 shares, no dividends are paid and, while shares can be gifted to family members, they can’t be sold. The main ownership benefit is the right to vote for the team’s board of directors.
“Anyone considering the purchase of Packers stock should not purchase the stock to make a profit or to receive a dividend or tax deduction or any other economic benefits,” the Packers said in their public-facing information on the sale.
Just before the shares went on sale, in November, Justin Salazar of Rio Hondo, Texas, told USA Today he was planning to buy a share as a gift for his dad. "I’ve been a Green Bay Packers fan since I was child because of my father's love for the Packers," he said.
The team is using the money to upgrade the concourse at Lambeau Stadium, which dates back to 1957 and is the oldest stadium in the National Football League, and to update its video scoreboard. The upgrades are expected to cost around $250 million.
According to NFL rules, money raised by stock sales are limited to stadium projects that benefit fans.
The team’s first stock sale, in 1923, was four years after the team was founded and was intended to help it avoid bankruptcy after a rocky financial start. Since then, it's had stock sales in 1935, 1950, 1997 and 2011.
The main benefit of the online platform is the real-time back-office processing of the share sales. Investors open an account in the online store, select the number of shares they want to buy, input their card number and the software takes care of the rest while giving the company immediate transaction visibility.
“It used to be you would call the lawyer or call the accountant and the CFO would have a big spreadsheet on their desk or a pile of paper and now we put all that in the online store,” said Goldstein. “You know in real-time how many purchasers have come into the portal, how many have paid for their order, which payments have cleared the banking system and whether there have been any chargebacks or rescissions. All of the purchase history is available online in real time, and you can run the analytics on a campaign with the click of a button."
Companies still have to conduct the capital raise themselves, which can be easy for a high-profile organization like the Packers but can be a challenge for little-known companies.
“You still have to find your investors,” said Goldtstein. “You still need to explain to them the value proposition of the company.”
That typically involves hiring outside advisors, particularly if it’s a 506 (c) capital raise involving accredited investors.
Where the platform makes a difference, the executives said, separate from the administrative simplicity it offers, is in the reporting; it automatically generates JOBS Act-compliant reports, which can help with disclosures and make auditing easier.
“The technology allows you to close investors in a way that you can complete a proper audit,” said Kacaba. “An accounting firm will have a very detailed reconciliation of who bought shares exactly at what price and what the payment processing costs were related to that share purchase. And the reports they can export gives them confidence in the numbers they’re putting into the financial statements.”