3c hapter - Index of

192 Locavesting
In designing his model, Michael had a few requirements. To
be easily replicated, it would have to be simple and not require
more than $500,000 in capital. And it must be something that
regular communities and workers could afford and embrace—
in other words, it could not be “bourgie,” as he puts it. Add in
the fact that the food industry is the largest employer after the
government, and a diner seemed the natural solution. Workers
Diner, as he is calling his venture, will allow workers to build up
ownership equity in the business through accumulation of preferred
shares, and to share in the profi ts. The workers will also
have voting rights and a say in the management of the diner.
Michael expects the diner to employ about 22 individuals when
it opens.
To pursue this vision, Michael and his two partners have created
a sort of cooperative business incubator (not unlike Cleveland’s
Evergreen Cooperatives in philosophy) called Workers Development
that will develop the diner concept, create a business plan, get it
started, and then move on to develop the next diner. “I’m the fancy
guy,” he says. “We act the role of the capitalist- entrepreneur, but we
don’t own the company or exploit it into infi nity.”
With the details worked out, the only question was how to
fund the venture. Michael wasn’t keen on taking out a big bank
loan, and he decided equity would be a better route. But when
he talked to New York lawyers about raising capital, he says, “they
laughed us out of the room.” (That’s one reason he will be starting
law school in the fall, after he fi nishes his master’s degree in
politics and public policy.) Michael heard about direct public
offerings and was referred to Cutting Edge Capital, a recently
formed fi rm that helps small companies explore creative alternatives
to raising capital. With Jenny Kassan, a lawyer who is Cutting
Edge Capital’s CEO, Michael began plotting his capital- raising
revolution.
Workers Diner expects to raise money in 2011 through a tristate
direct public offering under Reg D, rule 504 (the exemption
for offerings under $1 million) using the simplifi ed SCOR
form in New York, New Jersey, and Connecticut. His audience:
justice-minded investors. “Not exploiting workers is an intuitively