Slow MoneyAs most people know, I’m a long-time co-op person. I organized food co-ops back in the 1970s and housing co-ops in the 1980s, and I’ve been a member of one co-op or another pretty much continuously since I got out of college. Right now I’m in six, including, of course, Book View Café.

Co-ops are an established part of what I’m calling the alt.economy – businesses run with their employees and/or their members and/or social good in mind. Here in Oakland a lot of small food start ups are worker co-ops – businesses owned and operated by their employees.

But co-ops aren’t the only businesses with a larger purpose than making a profit. Organic farms, restaurants that get their food from nearby farmers, small bookstores that provide a gathering space for local readers, art galleries run by artists, a flour mill specializing in heirloom wheat – the list can go on.

These businesses often have loyal customers, but they share one other thing in common: it’s hard for them to get investors and other financing. Complying with federal securities laws is too complicated and expensive for a small operation, but in the past it was impossible for most operations to seek shareholders without going through this step.

Fortunately, that’s changing. Many states now allow businesses to do direct public offerings, which require less paper and legal work. Those are only available to people who live in those states, and there are caps on the amount people can invest unless they are “qualified investors” – that is, have lots of money. That’s a good rule intended to limit losses by those who can ill-afford them.

And now, under regulations finally issued to support the federal JOBS Act (adopted in 2012), there is a way of “crowdfunding” investment. That is, companies can take in small investments from lots of individuals. These are real investments, ones that will hopefully bring a return, not just a gift or something given in exchange for a perk, as with Kickstarter.

As I understand the rules, people can invest up to $2,000, but they can also invest as little $100. These are opportunities for people who don’t have a lot of money to throw around to put a little bit toward a business they’d like to support, as well as vehicles for socially responsible businesses to get funding.

They are risky investments, of course. On We Funder, an organization set up to help companies get investment through this kind of crowdfunding, they give this advice to people who ask whether they should invest:

If you can’t afford to lose every dollar you invest on Wefunder, the answer is no. If you can’t afford to wait 7+ years for a return, the answer is also no.

But as Marco Vangelisti, a former investment banker who now works at educating people on how to invest in local enterprises, says, the good projects out there are a way of “investing in the future.” Yes, a lot of them will fail and others will pay no return, but those that last can open the door to a better world for all of us, whether we’re talking about food or community or renewable energy or any number of ventures that can improve human lives.

Marco is part of the Slow Money movement.  It’s a national project, with local affiliates such as the one in Northern California.

I learned about the JOBS Act crowdfunding investment opportunities at an event put on by Slow Money here in Oakland. Amy Cortese of Locavesting moderated the event, which also included a representative from We Funder, a representative of ICA Fund Good Jobs (which offers training and business development), and the owner of a local business.

As the name Locavesting implies, these projects emphasize investing in the small companies in your area. But there are opportunities to go a little farther afield.

As I sat there listening, I kept coming up with businesses that could take advantage of this new system. It’s a lot of work – in fact, it’s a lot like running a Kickstarter campaign, except you also need to jump through legal hoops. But of course, starting a business is a lot of work by definition.

And it gives small businesses more possibilities than they had before the law took effect.

We were able to start BVC on a shoestring by sharing the work around and doing ebooks, which don’t require a lot of up-front investment. But not every co-op or socially responsible business fits into that model.

If you are starting a business, or if you’ve got a bit of savings and want to put some of it behind projects you believe in, you should look into the new crowdfunding investment options. It won’t make you rich, but it could make a difference in your life.



Alt.economy — 2 Comments

  1. Thanks for those links. I hadn’t heard of these, and I want to seek further.

    • Oh, good. I’ve been trying to keep up with this information and even I was surprised by what I learned at a workshop on crowdfunding investment. There’s not near enough information out there on it.