After giving up his White Whale Room coffee and cocktail bar in Denver earlier this year, Dakin Cranwell Jr., moved back to his native Chattanooga this summer to get on board with a new drinking establishment venture.
Cranwell's newest venture - the American Draft bar planned in a rail car at the Chattanooga Choo Choo - is getting on track with the help of an innovative crowd funding method Cranwell thinks could propel a number of new business startups in Chattanooga.
Cranwell has quickly collected more than $16,000 in revenue-sharing investments from friends, family and other investors through an equity crowdfunding program started by a New York software company known as Growth Fountain and promoted on the website of Chattanooga's biggest credit union.
"This is truly groundbreaking and a revolutionary way for small businesses to raise needed capital," Cranwell said.
The money will help Cranwell renovate the American car in the Glenn Miller Gardens at the Choo Choo and install the automated beer dispensing equipment that will allow individuals to choose among 29 beers on Track 29 and sample the beers by the ounce or the pint. The automated dispensing machines allow the individual consumer to fill his or her glass, after they are properly identified and pay their bar tab.
Cranwell hopes to open the unique automatic dispensing bar on the day after Thanksgiving, if all goes according to plan.
The venture is the first of what organizers of the new equity and revenue crowd funding method hope will become widespread for many entrepreneurs anxious to get startup capital to begin their business.
Growth Fountain, a software company that facilitates such crowd-funding investments, launched in February and has already raised more than $300,000 for small business ventures across the county.
Ken Staut, the co-founder and CEO of Growth Fountain, came to Chattanooga's Startup Week on Tuesday to pitch the idea as part of a tour through 10 heartland cities. More than 70 percent of all venture capital and equity investments in the United States comes from just three states - California, New York and Massachusetts - and Staut is eager to broaden the support and startup success in other areas.
"Historically until now, fundraising has been so difficult for entrepreneurs," Staut said. "You could only tell rich people about the investment opportunities and you had to have expensive lawyers and accountants to try to do any equity issue. When we started Growth Fountain, our sole misson was to level the playing field and simplify the fundraising process."
The Growth Fountain crowdfunding approach is getting a boost in Chattanooga from the Tennessee Valley Federal Credit Union, which is promoting the equity funding website as a service to its members and others.
Early-stage investments in startup businesses can be risky investments, but the Growth Fountain platform gives investors options for different amounts and types of equity or revenue sharing to support local businesses people might want to help get started.
Tommy Nix, vice president of business and commercial services at the Tennessee Valley Credit Union, said the program "provides the gateway and bridge for investors and individuals to come together very much like what credit unions did in their early years when folks pooled their money to help make loans to other people.
"Now using technology we can provide this as a service to connect people and local businesses," Nix said.
The announcement of the new equity crowdfunding method on Tuesday came a year after the Tennessee Valley Federal Credit Union announced last year its Idea Leap program, which provides up to $50,000 in commercial loans for startup businesses, often relying upon collateral such as patents, licenses or purchase agreements.
Cranwell received a $50,000 Idea Leap loan from the Tennessee Valley Credit Union, in addition to the crowd funded revenue sharing money.
"As a credit union, some of these initiatives will not generate any money for us, but we want to provide them as a service to our members and to help the growth of small businesses in Chattanooga," said Todd Fortner, president and CEO of the $1.3 billion-asset credit union, the fifth biggest in Tennessee.
In the first year of the Idea Leap program, 17 entrepreneurs received 21 loans for a total of $531,000 and so far none of the loans have been delinquent, Nix said.
A key to the success of the loan program, Nix said, is that the borrowers must have completed one of the accelerator programs offered in Chattanooga by the Company Lab, the Hamilton County Small Business Development Center, the Urban League or others.
For its investments, Growth Capital also verifies that the business organizers don't have a criminal record and the venture has at least some chance of success.
Under the Jobs (Jumpstart our Business Startups) Act adopted in 2012, equity crowdfunding is allowed with fewer of the regulatory burdens imposed on most publicly traded companies.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.