Crowdfunding— the practice of funding a project or venture by raising many small amounts of money from a large number of people—we hear about it on the news from time to time, but for many of us it seems like something that other people, in other places might do. However, you may be surprised to learn that crowdfunding is happening right here in southeast Michigan—including in Lenawee County.
Last year, Amy Cortese, author of the book, Locavesting: The Revolution in Local Investing and How to Profit from It gave a presentation in Adrian, talking about the growing locavesting (investing locally) and crowdfunding movement which encourages people to invest in local businesses where they can earn profits while building healthy, self-reliant communities.
Michigan has taken a proactive stance to leverage the benefits of crowdfunding and locavesting. In fact On December 30, 2013, Michigan enacted Public Act 264 (also known as the Michigan Invests Locally Exemption, or MILE) and became one of four states to authorize pioneering intrastate crowdfunding legislation. Interestingly, Lenawee County’s own Representative Nancy Jenkins introduced the bill which Adrian’s economic development and DDA director, Chris Miller helped to create. The law makes Michigan only the fourth state to have an investment crowdfunding mechanism.
The first crowdfunding and locavesting initiatives enabled by MILE are happening right here in Lenawee County. Tecumseh Brewing Company recently became Michigan’s first Investment Crowdfunding campaign under the new law and the company successfully reached its fundraising goal, supported exclusively by Michigan investors.
Throughout the crowdfunding process, over 100 investors visited Tecumseh Brewing Company’s project on www.localstake.com (an investment crowdfunding website and portal which is also the first such company to operate in Michigan under MILE) to learn about the investment opportunity. The final investment group totaled 21 individuals, mostly from the Tecumseh and Ann Arbor area with investments ranging from $250 to tens of thousands of dollars.
I also have personal experience with the crowdfunding and locavesting process. Recently I partnered with three other local investors and formed an LLC to create a local property management company. We recruited 20 other local investors to help fund our company. This funding, along with a government grant, not only allowed us to get our first project started, (the renovation and rental of a commercial and rental property in downtown Adrian) but it also allowed us to take an active role in enhancing our community.
So, as you can see, crowdfunding and locavesting are poised to become key drivers of local economic development. The passage of MILE makes it much easier for those of us who aren’t independently wealthy or seasoned investors to take our ideas and turn them into reality, while also improving the economy of our local communities. In addition, entrepreneurs have the ability to leverage crowdfunding investments to obtain additional capital from traditional banks or financial institutions, which can be extremely helpful for small business owners.
If you are interested in learning more about crowdfunding, Michigan’s Department of Licensing and Regulatory Affairs (LARA) website has some initial information that may be helpful.
Cary Carrico is a licensed agent with Kemner-Iott Agency, specializing in asset protection and risk management for small to medium sized businesses. Contact Us to learn more.
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