Former GoLite Owner Demetri Coupounas has surpassed his $50,000 first round fundraising goal for his new company My Trail Company on WeFunder 10 days after it and other crowdfunding sites were authorized to begin soliciting mom-and-pop investors.

My Trail Company, which has product designs and 150,000 customer email addresses GoLite accumulated over 16 years of doing business, had raised $61,175 by Thursday morning. The Boulder, CO-based company is seeking to raise up to $1 million to supplement $400,000 it has already raised from more than 125 investors in Colorado so it can begin opening stores.

My Trail Company is among 20 companies WeFunder has featured on its site since May 16, when Title III of the Jumpstart Our Business Startup Act of 2012 (JOBS Act) went into effect. Another is SlingFin, a five-year-old tent manufacturer based in Berkeley, CA; which expects to raise $50,000 by July to accelerate development of a hard-shell backpack called the Honey Badger. Other ventures soliciting investors on WeFunder include a company that wants to build a biotic pancreas, Hollywood’s first fan-owned studio, a distillery in Cleveland and other startups trying to do what WeFunder calls the “hard stuff passed on by venture capitalists.”

Taking Back The Industry
SlingFin Co-Founder and CEO Martin Zemitis foresees Title III of the Jobs Act revitalizing the outdoor industry by enabling the tinkerers who drive innovation to forgo professional funding rounds until they are stronger.

“What I see happening in our industry is as founders and owners have moved on, Wall Street came in and that changed the whole process as bean counters and MBAs took over,” said Zemitis, who has designed gear for The North Face and Sierra Designs and was a Co-Founder of Mountain Hardwear.

In their pursuit of growth and profits, Wall Street has pushed outdoor brands to shift resources from hardgoods to softgoods. That, Zemitis argues, has resulted in a glut of apparel and footwear and a lack of innovation in equipment; which many view as the heart and soul — if not the bread and butter — of the industry.

“This is going to completely change all that,” Zemitis said of Title III of the Jobs Act. “It gets Wall Street out of being the gate keepers of ideas and democratizes capitalism. It’s going to put America back to work.”

Like Golite, Only Better
In its pitch on WeFunder, My Trail Company said its business plans call for it to “grow methodically.”

“We’ll add small stores annually so each can be profitable from the start,” the company wrote. “Each season, we’ll introduce products that have sold out in stores. We’ll grow web sales with product line expansion and increase our customer base through physical store openings and direct marketing efforts. Within five years, My Trail Company plans to be as big as GoLite was at its peak and solidly profitability with higher margins and lower costs.

Coupounas LLC, which did business as GoLite LLC, was liquidated in November 2014 seven weeks after filing a Chapter 11 petition in bankruptcy court after failing to secure investors. In the petition, Coupounas attributed the company’s demise primarily to bad leases at some of the 20 stores it opened from 2012 to 2014, after halting wholesale operations and switching to a direct-only business model. Coupounas also struggled to sell the business after it had previously sold the GoLite name to Timberland along with the GoLite Footwear business.

“GoLite did many things well,” notes an investor presentation that My Trail Company uploaded to WeFunder. “Where GoLite needed to improve, My Trail will do better.”

To entice investors to invest the minimum $1,000 in My Trail Company, Coupounas is offering a 20 percent discount off all products they purchase from My Trail, “whether branded My Trail or not,” for as long as they own their shares. The offer applies on top of any other promotion My Trail may be running.

The Company, which was advertising but not selling, shelters, packs and accessories on its website as of May 26, began receiving shipments of its first SKUs this month.

Democratizing Capitalism
Title III of the Jobs Act governs how startup companies can “crowdfund” up to $1 million a year through intermediaries such as WeFunder from non-accredited investors. Such investors are generally considered to be high-net-worth individuals, banks and corporations sophisticated enough to analyze equity investments and wealthy enough to survive should they go wrong. To be considered an accredited investor in the United States, one must have a net worth of at least $1 million, not including the value of one’s primary residence, according to the U.S. Securities and Exchange Commission (SEC). Alternatively, one can have an annual income of at least $200,000 for the last two years (or $300,000 combined income if married) and the expectation to make the same amount in the year they make their investment.

Though the Jobs Act was signed into law in 2012, it took the SEC three years to finalize crowdfunding rules, which only became effective May 16, 2016. WeFunder, which lobbied for the law, said it is determined to help turbo-charge U.S. GDP growth, decrease disparity of wealth and bring back entrepreneurship in America, where the percentage of people under 30 owning a private company has fallen from 10.6 percent in 1989 to 3.6 percent in 2014.

Addressing The Skeptics
Crowdfunding has plenty of skeptics, including entrepreneurs who fret being bombarded with questions from mom-and-pop investors and hindered by messy cap charts that might discourage future professional investors. Some also question what happens if hundreds of customers/investors lose money on their investments.

Most of the companies on WeFunder are selling the equivalent of debentures, which are non-interest bearing securities that can be converted to shares in the issuing company. The value of those shares only become known when the issuer advances to its next funding round, at which point it has to provide potential investors with an independent valuation of its business.

“If the company’s doing well and their valuation increases, your shares should be worth more,” WeFunder explained. “It’s better to own 0.1 percent of a company worth $20 million than 1 percent of a company worth $1 million.”

According to SGB Executive’s reckoning, this means SlingFin’s WeFunder investors will break even as long as the Company is valued at its current $2.5 million value, or about seven-times projected 2016 sales.

Furthermore, those who invest at least $250 via WeFunder could recoup their investment by using lifetime discounts and other perks the Company is offering on the site.

“The goal is to get investments at or below $1,000,” Zemitis said. “People investing $100 are not looking for a liquidity event.”

As of May 26, SlingFin raised $20,090 from 55 investors, putting it on pace to reach its initial $50,000 goal by July. If it hits that, it may up its goal to $100,000 to raise money for other initiatives, including boosting factory order sizes to take advantage of volume pricing. That would instantaneously increase the company’s margin from 50 percent to nearly 60 percent and allow it to expand SlingFin’s dealer network while solving the repeated challenge of running out of inventory and losing out on sales, according to the Company. But there is no rush.

The beauty of this approach is it gives entrepreneurs time to grow their business at their own pace rather than that dictated by professional investors who may not share their agenda.

“The power of the crowd saves you from having to go to the one percenters who have all the money,” said Richard Ying, SlingFin’s director of operations. “It gives you a huge bargaining chip so you are not strong-armed by rich investors.”

Of course, this means SlingFin will not benefit from all the guidance a private equity firm or other strategic investor can offer. But after decades of working in the outdoor industry, that’s a trade Zemitis is willing to make this early in the Company’s development.

“The track record of those professionals is worse than that of the hippies that built this industry,” he said. “The Ivy League guys don’t have a good history. I could show you a lot of train wrecks.”

Photo courtesy My Trail Company