Amy Cortese | ImpactAlpha
How small investors are crowdfunding local businesses and overlooked entrepreneurs
Muizenberg, Cape Town, South Africa l Photo credit: Louis Smith
Invest in what you know, right? For smaller investors who know their own communities best, it’s been hard to follow Warren Buffett’s famous advice.
Now, a range of new approaches and products is allowing individual investors to invest directly in their peers and communities. Democratizing the ranks of those who allocate capital is also democratizing access to that capital.
Take the JOBS Act, the Obama-era legislation that allows everyday citizens to invest in small and local businesses. In the first full year since the new rules went into effect, such small-dollar, crowdfunded investments raised close to $55 million for more than 177 ventures. Women and minority-led ventures were more successful at meeting their equity crowdfunding goals than their white male peers.