The Why

Building local economies starts with your wallet. Americans have done it for years - by visiting stores in their community for goods and utilizing local companies for services. But as our economy continues to welcome conglomerates and push out the little guys through conveniences of price, availability and much more, it's harder to justify supporting small businesses on a budget.

Queue: local investment. While shopping small is always the best way to ensure the success of small businesses, investing locally can have a much larger impact on the growth of local economies.

Now you're probably wondering what a perfect local economy looks like and I'm here to tell you there's no perfect answer but what we're striving for is made up of: A multitude of well-paying jobs, provided by companies driving direct impact back into the community; Access to affordable housing, healthcare and education, all sourced from local companies; And, last but not least, community members willing to spend the time (and money) to bolster that economy over and over again. 

How to Invest

Investing locally isn't just about buying shares or bonds in a company. It’s also about making sure those investments support the communities they live in. That means looking at how an organization operates and whether its products and services align with the needs of residents. For instance, if a business sells food, does it source ingredients from within 100 miles? So how can you ensure you're finding the best investment opportunities for you and for your community? The alternatives range from self-driven investment to using aggregators that find investment opportunities focused within your community. Let's run through them from most to least accessible. 

Use a Local Bank

If you want to get started investing locally right away without having to go through any hoops, consider opening an account with a local banking institution. Credit unions are an awesome example of your money working for the community. Any money you deposit into local institutions is often re-distributed in the community through avenues like small business loans, community development loans, and mortgages for members of the neighborhoods you reside in. Small local banks and credit unions like this Florida credit union often function like cooperatives and rarely drive money outside of the communities they operate within so this is a great way to "invest" locally without risking anything.

Consider a CSA

A Community Supported Agriculture program allows consumers to invest directly in farmers who grow produce specifically for them. This model has been around since the 1970s when people began purchasing weekly boxes of fresh fruits and vegetables grown by family farms. Today, CSAs offer access to high quality foods while providing economic stability to growers. Because of the program's widespread success, CSAs are branching out to other industries such as breweries, bakeries, fisheries, and more, which allows for people to pre-purchase goods as a form of investment. In turn, you drive much-needed revenue in exchange for a later product delivery.

Donate to Local Crowdfunding Campaigns

Similar to CSAs, traditional crowdfunding, such as Kickstarter, allows anyone to contribute funds towards a project, often in exchange for a future product or experience. With as little as a few dollars, you could contribute to the success of businesses, products, or experiences within your community. Keep in mind though - oftentimes, crowdfunding is donation-based, meaning you should never expect anything in return for your generous contribution. Want to invest in your local economy and get a return? Check out the next option!

Try Peer to Peer Lending

Peer to peer (P2P) lending platforms allow investors to lend their money to borrowers based on their own risk tolerance. Kiva.org is a great example of a successful P2P lending operation where people across the world seek micro-loans to complete local projects for their businesses or communities. Because of the nature and size of these loans, the returns are often not as strong as the following options but can be a great way to lend a hand to your community. 

Invest in Regulation Crowdfunding Campaigns

Thanks to the JOBS Act of 2012, Regulation Crowdfunding allows anyone, not just accredited investors to invest in businesses with the assumption that money will be returned in the form of debt or equity repayments. Now, companies have the ability to raise capital via online platforms where investors can purchase equity or debt shares in their company. 

Mainvest is a RegCF platform that works with small businesses to get capital from their direct community to expand or grow their business. By utilizing revenue sharing notes (RSN), a debt-based investment vehicle in which a company borrows money from investors and agrees to pay back a certain percent of any revenue it may generate every quarter until all principal and interest is repaid, small business owners using Mainvest have the ability to enable their loyal customers to share in their successes.

As an investor, regulation crowdfunding allows you to have a vested interest in the success of a business within your neighborhood. By utilizing a Revenue Sharing Note, you receive returns whenever that business makes revenue. When you patronize that business, you essentially pay yourself back on your investment. It's a win-win for both the investor and the business. 

Be an Angel Investor

For the high net worth individuals looking to invest a solid chunk of money directly into a vetted business within your community, angel investing is a great way to do that. Essentially, you provide enough money for start-up or growth in exchange for equity in the company. You'll have to be an accredited investor to do this, meaning you have made and will make more than $200k a year for the past two and following two years or have a net worth $1MM or above. If you don't fit these qualifications, the other options listed are still opportunities for you to invest locally!

 While not an exhaustive list, this article provides a number of ways to invest local depending on the level of involvement and amount of money you are willing to part with in order to grow your community. At Mainvest, we support the growth of local economies in more ways than one, and you should too! So try a few of these options and see the impact of your investment in front of your eyes. We promise it will be pretty awesome to watch!

Written by Lauren Murdock

Lauren is Mainvest's Content Marketing Manager. She is an expert in marketing strategy and leads content generation for Mainvest.