http://www.youtube.com/watch?feature=player_embedded&v=jIl_hmCapp4
About the Speaker:
Amy Cortese is an award-winning journalist and a compelling advocate
for communities seeking to create a thriving local economy. Scouring
the country, Cortese discovers the pioneers who are creating new models
for funding locally owned businesses—from Slow Money to "crowd funding"
to local stock exchanges.
About Locavesting
http://locavesting.blogspot.com/
Welcome to the Locavesting blog. I have created this forum as an
extension to my book, Locavesting: the Revolution in Local Investing
and How to Profit From It (Wiley & Sons, June 2011).
What is locavesting? It's a term I coined to describe the local
investing movement taking root across the country. Just as locavores
eat a diet sourced close to home, locavestors try to invest that way.
The idea is to earn profits while supporting your local community.
Locavesting is about investing in Main Street, rather than the casino
known as Wall Street, and creating a more inclusive and just form of
capitalism.
The blog will continue to follow the unfolding experiment in citizen
finance by posting news about locavesting deals, developments relating
to small business capital raising, and events of interest to the
locavesting community. I invite you to share your own experiences or
submit news or feedback at amy@locavesting.com.
Locavesting: The Revolution in Local Investing and How to Profit From
It
How individuals and communities can profit from local investing
In the wake of the financial crisis, investors are faced with a stark
choice: entrust their hard-earned dollars to the Wall Street casino, or
settle for anemic interest rates on savings, bonds, and CDs. Meanwhile,
small businesses are being starved for the credit and capital they need
to grow. There's got to be a better way.
In Locavesting: The Revolution in Local Investing and How to Profit
from It, Amy Cortese takes us inside the local investing movement,
where solutions to some of the nation's most pressing problems are
taking shape. The idea is that, by investing in local businesses,
rather than faceless conglomerates, investors can earn profits while
building healthy, self-reliant communities.
Introduces you to the ideas and pioneers behind the local investing
movement
Profiles the people and communities who are putting their money to work
in their own backyards and taking control of their destinies
Explores innovative investment strategies, from community capital and
crowdfunding to local stock exchanges
With confidence in Wall Street and the government badly shaken,
Americans are looking for alternatives. Local investing offers a way to
rebuild our nest eggs, communities, and, just perhaps, our country.
Q&A with Author Amy Cortese
Author Amy Cortese
What is locavesting?
Locavesting is a term I came up with to describe the emerging local
investing movement. Most of us are familiar with the term locavore,
which refers to the growing number of people that try to eat a diet
sourced within a 100-mile or so radius. Locavestors are people who want
to invest that way. The idea is that you can earn a profit while
supporting your community.
Why should we invest locally?
>From an economic perspective, small businesses – which, by definition
are mostly locally owned – create more than two out of every three
jobs. They also benefit their communities in ways that big corporations
do not. Studies have shown that a dollar spent at a locally owned
business generates three times more direct economic benefits to the
community, measured in wages and local spending, than a dollar spent at
a corporate-owned chain. And that gets to an important point. So many
of our iconic corporations are no longer connected to any place at all,
they are global, they produce in overseas factories, and they employ
more people outside the U.S. than within. Local business owners, in
contrast, have a stake in their communities – they live there, after
all – so they make decisions in a different way than a corporation that
is solely interested in maximizing profit.
>From an investment perspective, local businesses can be quite
successful. They’re not just mom and pops; they can be established,
growing multi-million dollar enterprises. I would also argue that their
proximity and familiarity makes them a less risky investment than, say,
sinking money into a company halfway around the world whose business
you don’t understand, or investing in a seemingly safe company like AIG
or Lehman Brothers or BP. That said, no one is suggesting that everyone
go out and invest all of their money in the local hardware store. But
local businesses can be part of a smart diversification strategy. And
here’s why it’s important. These firms – the ones that create jobs and
contribute to a vibrant local economy – need capital to grow like any
business. But they’ve been largely abandoned by Wall Street and
traditional funding sources. Think about what life would be like
without these businesses.
So why aren’t more people investing locally?
Well, it’s actually not that easy to do. Our securities laws, which
were crafted nearly 80 years ago, make it very difficult for investors
who are not super wealthy to put money into private businesses, and for
those businesses to reach out to their communities. It’s easier for
most people to invest in a company half way around the world than one
in their own backyard. And that’s a shame. But it can be done. I wrote
the book to highlight the different ways that people are coming up with
to put money into their local businesses. And there is a groundswell of
activity in this area.
Give me some examples.
There is an amazing amount of activity going on across the U.S. and in
other countries. Some of my favorite examples are the ad-hoc community
capital deals, where residents become investors in a beloved business.
In Brooklyn, where I live, two-dozen residents of Fort Greene lent a
total of $70,000 to help a new neighborhood bookstore open, and a year
later it is thriving. Nine cops in Clare, Michigan pitched in to buy a
111-year old bakery that was about to be shuttered. Instead of another
vacancy on their main drag, the new bakery has helped revitalize
downtown Clare. In the area of food, Slow Money is a cool organization
that is creating new ways of financing sustainable food and
agricultural enterprises.
There are other models as well. Crowdfunding sites like Kiva and
Kickstarter have showed that aggregating small sums from many people
can be a successful way to fund a venture. But they are either
donations or interest-free loans. Now crowdfunding is being applied to
equity and debt investments in businesses that earn profits for
investors.
Direct public offerings, which are like IPOs but conducted without a
Wall Street middleman, allow companies to reach out directly to their
most loyal customers and supporters to raise funds. And local stock
exchanges are making a comeback.
Can you talk more about local stock exchanges?
Sure. Many people don’t realize that less than 100 years ago, we had
dozens of regional stock exchanges across the country that fueled their
local economies. Baltimore, Buffalo, St. Louis, Salt Lake City,
Seattle, Wheeling, W. Virginia - they all had their own stock markets.
That changed, of course, with advances in communications technology.
The local exchanges gradually died out or merged. Today, our stock
markets are global and efficient, but they facilitate speculation over
productive investment. And escalating costs have made it prohibitively
expensive for many deserving firms to go public. According to one study
(by Grant Thornton), the capital markets are effectively closed to 80%
of companies that need them.
That’s why we’re seeing a revival of the local stock exchange idea.
There are initiatives underway in places as varied as Lancaster,
Pennsylvania, Hawaii, Cleveland, and Toronto to recreate the local
exchanges that once served their areas so well. These exchanges would
provide an important source of liquidity for many locavesting models.
Did you come across anything surprising through the course of
researching your book?
Well, I’ve been struck by how strongly people feel about their local
businesses, and the yearning out there for an alternative to the
winner-take-all ways of Wall Street, for solutions that promote a more
inclusive and broadly shared prosperity. Just as every purchase you
make is a vote, every investment dollar sends a deeper message about
what kind of society we want to live in. And people are starting to get
that.