2018 trends

Spotlight

The Year in Community Capital: Coops, Crowdfunding and Other Coups

Locavesting Staff | December 28, 2018

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It’s been a head-spinning year. But amid the chaos, a lot of good progress was made in the community capital field.  Here are some of the top stories of 2018:

1. Coops Rising

The United Nations designated 2012 the International Year of Cooperatives, but we would argue 2018 was the year that cooperatives really began to take hold in the modern U.S. economy. In particular, worker coops—a form of cooperative where workers have a stake in the ownership, profits and management of an enterprise—have experienced a resurgence amid a concentration of corporate power, stagnant wages and wealth inequality.

At the same time, an ecosystem is developing to help new cooperatives get off the ground, including new financing initiatives from players such as the Evergreen Cooperatives and Transform Finance, to an accelerator that helps cooperatives scale and thrive.

2. Crowdfunding Gains Traction

Regulation Crowdfunding turned two in 2018, and like the toddler it is, has grown impressively. Reg CF closed out 2018 with nearly 1,500 offerings launched to date, $175 million in investor commitments, and 180,000 investors, according to Crowdfund Capital Advisors.

Lynn Smith, founder of Buy The Block, a crowdfunding portal that debuted in 2018

There are now 46 approved funding portals, and new platforms continue to join the fray. 2018 saw the notable additions of SVX US, Crowdfund Mainstreet and Buy the Block, the first African American (and woman) owned portal.

But the real story has been the results: companies (especially those owned by women and minorities) are getting funded at impressive rates. Crowdfunded companies are getting follow-on funding. And, while it’s still early, investors are getting repaid.

3. #UsToo: New Funding Options for Women and People of Color

When it comes to startups, women are creating more businesses than their male counterparts, and African American and Latina women are leading the pack. However, women, especially non-white women, still lag in terms of revenue and job creation. That is changing, as funders set their sights on underserved—some would say underestimated—groups.  Venture capital firms are adding women and people of color, and new funds are spying opportunity in formerly overlooked groups. To name just a few of 2018’s debuts: Sundial and Unilever’s New Voices Fund; Grameen America’s Social Business Fund; the Entrepreneurs of Color Fund. They join innovative, grassroots-driven like the Runway Project.

New  accelerator programs also debuted, including Village Capital’s VC Pathways and the Miller Center for Entrepreneurship’s wonderful Social Entrepreneurship at the Margins, focused on migrants and refugees.

4. Real Estate: Putting the ‘Place’ in Place-based Investing

The focus of local and impact investment has traditionally been small business ventures. But as rapid development and rising real estate costs threaten to displace many families and local businesses, affordable real estate is becoming an imperative. New solutions arose in 2018 that aim to keep property not just affordable, but in community hands. The approaches are as innovative as they are diverse, ranging from shared equity financing to cooperatives that emphasize democratic ownership and permanent affordability.

The Bikery, a coop, is one of the tenants that bought their building on 23rd Ave. in Oakland and preserved its affordability

Crowdfunding portals such as Small Change and Buy the Block also facilitate community ownership of local development.

5. Financial Advisors on the Front Lines

More investors want their money to align with their values, whether by investing locally or in sustainable companies. But while there are more choices than ever, these uncharted waters can be difficult to navigate, especially for retail investors. That’s where a good financial professional comes in.

Finding a values-based financial advisor is getting easier. A growing number of financial advisors are certified B Corps, for example. And a new professional designation for financial advisors, the Chartered SRI Counselor (CSRIC), went into effect in 2018. The designation “is a way for professional advisors to show they have more than a passing interest in impact investing and to put some more rigor into the training around this space,” says Michael Young, manager of education programs for US SIF, a nonprofit that helped created the certification.

Also in 2018, RSF Social Finance graduated its first class of Integrated Capital Fellows, a nine-month program focused on steeping financial professionals in creative capital approaches to funding social enterprises.

6. Banking for Good: It’s a Thing

It can feel like financial consolidation has left us with just a handful of big banks. And while that’s not too far from the truth, community banks and credit unions are flexing their modest muscles. The most successful are laser-focused on a mission, be that local sustainable agriculture, as in Maine, or renewable energy, like Namaste Solar’s new credit union, or becoming “America’s Progressive Bank, like Amalgamated Bank. They join a host of others focused on using banking as a force for good.  

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