Read this short and sweet interview with Amy Cortese, then join us on Friday night to hear her speak!
Newsmakers: Amy Cortese sees a future for local investing
By Christina Williams
Sustainable Business Oregon
Amy Cortese’s book about local investing was published last year, just as an eroded trust in Wall Street left many investors looking for another option.
The book, “Locavesting: The Revolution in Local Investing and How to Profit From it” covers how a shift in directing investment dollars from global companies to neighborhood enterprises can deliver social and economic returns.
Cortese will be in Portland Friday, speaking that evening at the Jumpstarting Local Investment eventpresented by Springboard Innovation partners Supportland, Slow Money NW and LION:PDX at the Ecotrust building.
We caught up with Cortese over the weekend to get her thoughts on the book and why Portland is “a natural” for local investors.
Sustainable Business Oregon: When did you coin the term “locavesting”?
Amy Cortese: I coined it in late 2008, in a piece I wrote for the New York Times’ annual ‘Year In Ideas’ issue. It was right after the financial meltdown. I wrote about the idea of reviving local stock exchanges — like the ones that used to thrive across the nation— and called the people that were, and still are, looking for local investing alternatives “locavestors.”
SBO: At what point did you decide there was enough of a revolution happening to fuel a book? Was there a particular event that prompted it?
AC: It’s funny. I got a call from a book agent after the local stock exchange piece ran, and he asked if I had thought about doing a book. I hadn’t. In fact, I wasn’t convinced it was a book. So I started looking around some more, and the more I looked, the more I found. Partly it was timing. People were just really fed up with Wall Street and ready to do something about it. I went to a Slow Money conference in Santa Fe in the fall of 2009. It was the very first one. That conference drew a few hundred people from all over the country and some really interesting ideas were floated. I knew then that something much bigger was going on. So that was inspiring and a true catalyst for me doing the book.
SBO: Is locavesting the same thing as crowdfunding? Related?
AC: Interesting question. Crowdfunding is a subset of locavesting. Locavesting encompasses a much broader range of models for investing locally. But it’s important to point out that crowdfunding is not always local. In fact, there are already global web sites that let anyone invest in startups that come from all over the world. That’s not local investing. And in fact, I think those sorts of crowdfunding sites, where the focus is getting in on the next hot startup, wherever in the world it is, are going to attract speculators.
Local crowdfunding, or community crowdfunding, is a much different proposition. Here, you are investing in businesses in your area, so as an investor, you have much more knowledge and familiarity with the market. And the companies raising money are reaching out to friends, neighbors, customers and the community at large. So it’s a much more intimate, and I think less risky, form of crowdfunding.
SBO: What’s the most inspiring locavesting story you’ve heard?
AC: There are a couple of examples from New York, where I live, that involve local bookstores. One is the Greenlight Bookstore, which I write about in my book. It’s in Fort Greene, an eclectic neighborhood with lots of writers and creative types, but they didn’t have a local bookstore. So when two women planned to open one, the neighborhood threw them a welcome party. But then — this was in late 2008 — the bank loan they were planning on fell through. So about two dozen residents lent the women the $70,000 they needed to open the store, in return for a modest interest rate and a discount on books. Well, Greenlight has been a huge success and turned a profit its first year. And its lenders are its very best customers. It’s been a win-win for all involved.
There’s also a new bookstore called La Casa Azul, after Frieda Kahlo’s “blue house,” that just opened in East Harlem to serve the area’s Spanish-speaking community. The owner raised money to open the store through Indiegogo, which, like Kickstarter, is a crowdfunding site that lets people contribute money in exchange for perks, like a tshirt. I’m one of many people who donated money to La Casa Azul. I think I get my name on the wall. But very soon — when the Securities and Exchange Commission finishes writing the rules that will make all of this legal, expected by early next year — we’ll be able to actually invest in local businesses and share in their financial success. I think that’s important if local investing is ever going to become mainstream. Because you can’t retire on a t-shirt and a thank you note.
SBO: Are there areas in the country where local investing is catching on more than others? Any hotspots?
AC: You know, it’s happening everywhere, not just on the coasts. I’ll be speaking in St. Louis before I come to Portland, and they’ve got a Slow Money chapter as well as a really cool crowdfunding site in the works called Fund St. Louis that will galvanize local investing in the area. I think this is a movement that is in its very early stages and will continue to grow. When crowdfunding becomes legal early next year, we’ll see an explosion of local crowdfunding and other locavesting models in communities everywhere. I think Portland is a natural.