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Crowdfunding and Community Investment Using Local Money to Implement Local Projects MML UP Summit June 1, 2017 Angela Barbash, Revalue Luke Forrest, MML

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Page 1: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Crowdfunding and Community InvestmentUsing Local Money to Implement Local Projects

MML UP Summit

June 1, 2017

Angela Barbash, RevalueLuke Forrest, MML

Page 2: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Why is this a conversation?

Page 3: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

But first…

Activation of local capital

Aggregation of local capital

Local investment of local capital

Page 4: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Now, why?

Page 5: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Historical context

Local economies

Economic evolution

Regional influence

Global influence

Global competition

Loss of control

Let’s talk Michigan…

Page 6: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

And the BIG why?

SURVIVAL.

Page 7: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

What are we talking about?

Page 8: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Two major buckets

Not Investment-based

Donation Pre-sale

Investment-based

Debt Equity

Page 9: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Examples

$250,000 $850,000

Page 10: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Investment-based terms to know

Platform: a website that connects businesses/projects with investors/donors/consumers for

the purposes of securing capital

Stakeholder: YOU! Also advisors, attorneys, accountants, financial advisors, community

leaders

Escrow: when money is moved from an investor to an intermediary before it is dispersed to

the business

MILE: Michigan Invests Locally Exemption, passed in 2013

JOBS Act/Title III: Federal investment crowdfunding legislation, rules implemented in 2016

Accredited/Nonaccredited: Over $1 million in net worth/under $1 million in net worth

Page 11: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Examples

$97,000 $25,000

Page 12: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Donation/Pre-sale-based terms to know

Crowdgranting: evolving crowdfunding by combining the power

of crowdfunding with the resources of grantmaking organizations

Perks/Rewards: what you get in exchange for your donation (not

all campaigns have these)

Public Spaces, Community Places (PSCP): a crowdgranting

partnership between the Michigan Economic Development

Corporation (MEDC) & Patronicity

Page 13: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Engaged: Citizens given power to control grants

Innovative: Combining traditional grants w/technology

Effective: MEDC spends less time reviewing projects, more time supporting them

Public Spaces, Community Places

Page 14: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

99%

$7,299,093

5,362,639

1,000,000+

3.5

Page 15: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

How is it done?

Page 16: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Principles

1. Plan on a 6 month process, even for short 30 day campaigns.

2. This is not ‘field of dreams’; you need an audience first.

3. Have a story to tell, and tell it using video.

4. Status updates need to be posted regularly.

5. Teams of 3 or more are 4x more likely to be fully funded.

Page 17: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Platforms

Page 18: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Strategies

Preferred Equity

$2,500 Minimum

All Investors

Revenue Share

$500 Minimum

All Investors

Page 19: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Platforms*

Page 20: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Strategies

PSCP Match

289 Backers

10 Perks

81 Backers

14 Perks

Page 21: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Break time!

Page 22: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Mock Scenario Setup

Page 23: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Report Out & Debrief

Page 24: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Before…

Page 25: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

After…

Total of 33States implemented intrastate crowdfunding measures + 7pending

Page 26: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

Before…

Page 27: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

After…

Total of 51Cities in Michigan participate in PSCP

Page 28: Crowdfunding and Community Investment · Also advisors, attorneys, accountants, financial advisors, community leaders Escrow: when money is moved from an investor to an intermediary

What now?

1. Share this information with key community leaders

2. Commit to helping a business or project launch in your town this year

Angela [email protected](888) 642-2728 (office)

Luke ForrestDirector of Civic [email protected] (cell)