At first glance, Chroma looks familiar. The website helps writers, filmmakers, and other creators seek money to fund new projects: the very model that turned “Kickstarter” into a noun, a verb, and a cliché. But instead of offering T-shirts, trinkets, and backstage passes as inducements, like the famous crowdsourcing pioneer, Chroma promises investors cold, hard cash. If, that is, the projects they fund succeed.

“The average donation to Kickstarter—and it is a donation—is about 25 bucks,” says Mike Merrill, Chroma’s 38-year-old cofounder. “How many people do you need to achieve something of any volume? It’s massive.” 

Marcus Estes, Merrill’s 35-year-old comrade, jumps in: “But if investors might see money back, you don’t have to do Kickstarter’s megaphone marketing. You make your case to a smaller group.”

The company, launched early this year, remixes both crowdsourcing populism and venture-capital elitism. Chroma handpicks promising projects and provides a platform for small investments in them—up to $2,500 per person. Instead of equity stakes, investors get a slice of any future profits. Project creators keep ownership and control, while Chroma’s software platform tracks the money and divides the spoils.

Up until this year, this whole concept was illegal. Since 1933, the federal Securities Act—a key part of the New Deal—limited private investment to “accredited investors.” That means individuals of a certain net worth, making $200,000 or more a year, and registered with the Securities Exchange Commission. “You don’t have guys on infomercials scamming Grandma with ‘Hot shares, get ’em now!’” explains Estes. “That makes sense. But it does guarantee that the rich will get richer.”

Two new laws make Chroma possible: the federal 2012 JOBS Act, which allows companies to solicit the public for investment money, and a brand-new Oregon rule that allows private companies to raise up to $250,000 from unaccredited investors. Chroma set sail with two pilot projects, eligible under the federal rules only: The Digits, an educational app raising money to launch a public television series, and The Second River, a game from Portland’s Mountain Machine Studios. Merrill and Estes say they hope to float more projects this summer as the new Oregon system takes effect. Chroma will reap a 5 percent fee on payouts to investors.

The founders infuse their grassroots investment model with just a little radical passion. “There’s a vested interest in making sure American families put their money into public stocks,” says Estes. “This is not a sea change that makes a lot of sense for institutionalized power.”

Adds Merrill: “Imagine if people were investing in their neighborhood coffee shops, instead of Starbucks.”

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