Buying local is ‘in’ (especially here in Portland) – local beer, local produce, local wine, locally produced furniture, locally produced… well, you know the deal. And for good reason. Here at Hatch, we’ve been espousing the benefits of “buy local” for some time – but now are able to encourage something with much broader and longer-term impacts: “invest local.”
The power of keeping capital within a community has been demonstrated time and again. Buying local keeps money in the local economy. But we want to shine the spotlight on actions with more bang for your buck: investing in companies through CPOs, or Community Public Offerings. In Oregon, a CPO allows an Oregon resident to invest up to $2,500 in an Oregon Company. This transaction has long term, direct implications for both the investor and the business.
Investing locally has a longer term impact
By investing – even a small amount – in a local company, your dollars are helping to take that company to the next level. Rather than acting as a donation, a local investment stays in the community for a much longer time. It also allows companies to grow at their own pace, and allows a focus on account community interests (as opposed to the interests of out-of-state banks, or investors demanding rapid returns).
Of course, investing locally benefits the investors (you!), too. Investing your money with people you’ve met and talked to allows a closer connection to the business, and allows you to see the impact of your local dollars – as well as the prospect of sharing in the success of these local businesses.
Local investing laws are sprouting up across the country, making it easier for small businesses to raise capital, and making it possible for the first time ever for non-accredited investors (the 99%) to be real investors in local businesses, not just customers. These laws (which are known as intrastate securities crowdfunding exemptions) do require, however, that investors conduct their own due diligence.
Here are some basic principles of due diligence:
(These principles are from local-investing.com, a great resource for new local investors)
- Define your financial needs, goals, and risk tolerance, and only make investments that are a good match for you.
- Work with a team. Two (or more) heads are better than one, especially when your money is on the line!
- Be patient. Look at several deals and talk to the entrepreneurs before taking the leap to invest.
- Dig deep. Conduct research and ask around. A great thing about local investing is that you can draw upon your own network to find out about the businesses in your community
- Think for yourself. Just because lots of people are investing in a business doesn’t mean it’s a good deal. And, just because a business doesn’t have a lot of investments, doesn’t mean it won’t be the next big success.
- Trust your intuition. Investing is not a science. Do your research, but when it comes down to it, an investment should feel right.
Buying local provides short term benefits all around, and is an important part of a thriving community, but investing local amplifies this impact and has a more long-term and wide-spread effect.
So, make the jump from buying local to investing local AND buying local. If you are an Oregon resident, you can invest on HatchOregon.com. You can search for information on other states at CrowdfundInsider.com and crowdfundinglegalhub.com, and for extra information on locavesting.com and local-investing.com