"Locavesting": Investing In Main Street Instead Of Wall Street

[cali]

BY Danielle SacksWed Aug 3, 2011

What if you didn't send your money to a faceless investment bank, but instead gave it to a local business? We spoke to author Amy Cortese about local investing, where people keep their capital within 50 miles of where they live.

"The crazy thing is it’s easier for most people to invest in a company halfway across the world than in their own backyard," says Amy Cortese, author of the recently published Locavesting: The Revolution in Local Investing and How to Profit From It. Cortese, a former BusinessWeek editor, got her first glimpse of the revolution in 2009, as she witnessed communities swallowed up by the hangover of the economic collapse. "Wall Street rebounded, bonuses were back, everything was looking up, but it was so starkly different on the ground, on Main Street." Cortese spent the next year on a journey to uncover the most innovative experiments in citizen finance around the world, from local stock exchanges to cooperatives and DIY IPOs. Fast Company spoke with Cortese about “locavesting,” the term she dubbed that, similar to the spirit of locavores, describes the movement to rebuild sustainable communities by investing in businesses within 50 miles of where you live.

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Amy Cortese: Americans have about $26 trillion dollars in investments, and now it's probably closer to $30 trillion. Imagine if half of that, $15 trillion, was invested in local communities rather than multinational conglomerates that are outsourcing jobs and not investing domestically. I think we’d be living in a far different world. That said, it is a little idealistic to think we’ll ever get to 50% any time soon. But even think about 10% or 5% or 1%. One percent of $26 trillion is $260 billion going to the Main Street economy and that’s a lot.
Isn’t that a bit of back to the future? Basically, what our country looked like 100 or 200 years ago?


In your reporting, did you find evidence that communities that invested locally were more resilient during the recession?

Yes, absolutely. One of the best examples is Hardwick, Vermont, where community investing has been unfolding for a decade. It started when the area's new generation of farmers and entrepreneurs began getting together to help each other work through business issues. Many of them, such as Tom Stearns of High Mowing Seeds and Pete Johnson of Pete's Greens, were experiencing rapid growth and would run into cash flow problems, so they began lending money to each other to get through lean times. Around 2005, Stearns raised $1.1 million from a group of (accredited) local investors, all within 50 miles. Other community investments followed. Claire's Restaurant, which showcases food grown or raised by the area's farmers, sold prepaid "food coupons" to 50 residents for $1,000 apiece, which entitled them to $25 off a meal once a month for four years. It's sort of modern day barn raising. All of this mutual support and reinforcement has attracted more entrepreneurs to Hardwick, like the Vermont Food Venture Center, a shared use facility for food producers and startups, which has relocated to Hardwick from Burlington to be part of the action. In the last three years, while most of the country was struggling with unemployment, Hardwick created 100 food and agriculture-related jobs, increasing local jobs by 25 percent.

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http://www.fastcompany.com/1771064/locavesting-investing-in-main-street-instead-of-wall-street?partner=gnews