Springboard's Blog

We are interested in growing  three critical pieces to the local economic puzzle: (1) Investable enterprises, (2) tools for local investing, and (3) local investors.  Fostering a new economy – one that has a long view – is what this is about. Springboard’s mission is to nurture new kinds of enterprises that won’t kill us or the planet, enterprises that solve problems AND are financially viable. These enterprises also create powerful livelihoods along with increasing economic health. 

Many understand this as a global trend, but everything is truly “local” when you get right down to it. Therefore, the sweet spot is to look at our neighbors and our communities and ask ourselves, what can we do here and now?

We can work on the critical stages of enterprise development, from start up to scale, helping improve ideas and fostering enterprises that really benefit our communities.

These “better” enterprises would start out with a more community-minded legal structure (see B Corp Push in Oregon), they would be sustainable, community focused, and, ideally, community fueled!  We have a lot to learn if we are to shift the practices of the past (and the present) into something better for all of us. There are strategies and methods we can adopt right now that could tranform our community.

And, we have to start with the money.

So, back to alphabet stew. Let’s start with the particulars of the letters DPO. It stands for Direct Public Offering (see wikipedia’s definition here). Briefly, it’s a way to legally offer shares for investment in an enterprise to people who don’t usually get to invest directly in anything. (That would likely be you and me, probably, since this group comprises 96% of us.) We’re called “non-accredited” investors. According to Jenny Kasssan of Cutting Edge Capital, this group is almost completely untapped by entrepreneurs. From the entrepreneur’s point of view, we could make beautiful music together. From a citizen investor’s point of view, it’s a way in to getting engaged in the local economy – a sure win-win.

So, how does an enterprise “do” a DPO? You fill out a Small Company Offering Registration form (the SCOR form). It’s about 44 pages, and even has a manual (Issuer’s Manual for Form U-7) which is full of appropriate questions and examples. Learn more here  from the North American Securities Administrators Association (NASAA). It can take from one to three months to receive approval, often in two phases (where you have to fix what wasn’t right the first time in Phase 2).  

Imagine a scenario where there are 10 or 20 DPOs available in a city at any given time. The average citizen now has choices for where to put investment dollars, along with influencing what kinds of businesses grow in town. If we have stronger connections with our local  businesses (and nonprofits), their chances for success increase. We can use this legal tool for community investing right now, all we need are community investors.

Here is where we run into another challenge. We don’t know who we are.

Put another way, we don’t know that we are investors. You have money in a bank, in a savings account, or maybe in some stock market fund that someone else manages. You ARE an investor, you just don’t think of yourself as one.

That has to change. 

Meet the Local Investing Opportunities Network (the LION of my title). Started in Port Townsend, WA, it’s a group of people who live in town, who provide investments, mostly in the form of loans, to local businesses. They talk to each other, make connections, help educate people, inviting them to the table, and then conduct their deals privately and directly. They provide a framework for investors to work in their own community, providing triple benefits – their own, the enterprise’s, and the community’s economy.

From their Web site: “Keeping funds local facilitates greater economic self-sufficiency, job growth, economic development, and a dollar-multiplier effect whereby a dollar kept within the community can be spent many times over for a far greater benefit than a dollar invested away from our community.”

There’s clearly more to it than this overview. How do community investors conduct due diligence? Find deals? What resources are there for me if I’m an entrepreneur? Springboard Innovation, Slow Money NW, Supportland, LION:PDX and Cutting Edge Capital, along with a number of other community partners, are working together to bolster these areas in a Re:Forum series in 2012, bringing resources, expertise, educational opportunities, and strategies to Portland. It’s an incredibly exciting possibility for all of us, building bridges with reasoned and thoughtful finance between citizens and their enterprise neighbors.

To learn more about how to engage, check out our Re:Forum series on Jumpstarting Community Investing.

(Many people accept the fact that small businesses create jobs and economic stability, but the debate has surfaced again. For more on the final answer, see Michael Shuman’s article, “Small Thinking About Small Business: A Rebuttal to Jared Bernstein.” )