[Scpg] TEDxMaui - Amy Cortese - Locavesting

Sat Apr 14 18:05:15 PDT 2012

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 at 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.

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