Small businesses account for half of our country's economy, but they receive a trivial fraction of commercial credit from banks and almost none of the $30 trillion Americans have in long-term savings, in vehicles such as stocks, bonds, and mutual funds.
StayLocal has been working with local and national experts to flip the script, and open up opportunities for individuals to invest in local businesses they know and trust as well as allow local businesses to raise funds from their local community.
Last Fall StayLocal hosted nationally-renowned experts Jenny Kassan and Michael Shuman, as well as local entrepreneur Jacob Landry, for a Symposium on Investing Locally. The day featured a round-table, one-on-one mentoring sessions, and public symposium on community capital.
Michael Shuman kicked things off, discussing the composition of our economy, and how well-meaning regulations from the 1930's have created an "investor aparteid" of sorts that makes it very difficult for most Americans (unaccredited investors) to redirect any of their savings to local businesses they believe in. Michael also discussed the JOBS Act, which was based on reforms he initially advocated for in an article in 2009. Michael also discussed reforms happening at the state level, such as intra-state crowdfunding laws that have been passed in nearly a dozen states. He also pointed to examples in Canada, which include Nova Scotia's Community Economic Development Investment Funds, and Manitoba's tax credit for individuals that invest locally.
Michael's presentation is available here >
Up next was Jenny Kassan. Jenny is an expert in Direct Public Offerings, a little-known financial instrument that allows businesses to raise money directly from in-state, unaccredited individuals. A DPO is an investment offering made using public advertising that allows an unlimited number of accredited and unaccredited investors. It is made directly to investors, so there is no middle men. They're legal now, and have been so for decade. Every state has different laws governing them, but Louisiana's is relatively straightforward. Jenny provided some examples of businesses who have used DPO's to raise capital, and discussed how they can be done in Louisiana.
Jenny's presentation is available here >
Last was local entpreneur Jacob Landry, who is pursuing his life-long dream of opening a brewery right here in New Orleans. Jacob explained how he'll need $1M-$1.5M in start-up costs in order to be profitable in 2-3 years. He explained his fundraising strategy, as well as some of the obstacles an entrepreneur runs into when trying to start a new business. To raise the last portion of funding, Jacob is considering creating a Direct Public Offering to raise $200,000-$400,000 from Louisiana residents. This DPO would require a $1-2k minimum investment, and investors would also receive membership in his "Founders Club," which would feature bonuses like free growler refills, special events and more.
Jacob's presentation is available here >
We left the event brimming with ideas for how New Orleans could get some local investing initiatives off the ground. If this sounds like something you'd like to be a part of, contact firstname.lastname@example.org.
Michael Shuman and StayLocal Program Manager Mark Strella also went on WTUL's News and Views morning talk show to discuss local investing. The podcast of the hour-long broadcast is available for streaming or download here.
Also take a look at...
> Top Ten Policies to Support Local Economies - A list of policies that state legislatures could implement to support local economies by Michael Shuman. Click here >
> Deploying Our Investment Capital Locally Yields Better Returns for All
"If you took $1,000 and invested it in a certificate of deposit in any of the three largest banks in America today, you would earn 1% or less on your money and have to pay income tax on that gain. Take that same $1,000 and put it in a secured government issued bond or mutual fund, and your rate of return might get as high as 2% in today's market. But if you invest it in your own community, you could earn an after-tax rate of return of between 5-7%. Three times as much." Click here to listen to the full interview with Francis Koster >