NEW YORK, April 26, 2012 /PRNewswire/ -- Today the National Crowdfunding Association www.NLCFA.org launched CrowdFund Local, its nationwide initiative to bring crowdfunding to every town and enterprise community in America that wants to give its citizens the opportunity to invest in their local businesses, and for the local businesses to find the capital they urgently need to operate, expand, and hire new employees.
Crowdfunding is the freshly legalized method for small and start-up businesses to raise up to $1 million per year by issuing equity to many small investors through an online site (portal). The National Crowdfunding Association (NLCFA), which formed five weeks ago and is the largest and fastest growing crowdfunding group in America, is comprised of a wide array of companies, firms and individuals who have an interest in the success of equity crowdfunding. Those members include businesses, crowdfunding portals, investors, attorneys, accountants, vendors, service providers, software developers, consultants, venture capitalists, angel investors, universities, students, and others.
"This is as busy a time as it is exciting and unique," said David Marlett, Executive Director of the NLCFA. "While our members are working hard to establish best practices for the crowdfunding marketplace, and assist the SEC in its drafting of the crowdfunding regulations, we are also launching new programs to not only educate people about crowdfunding, but also to make it available to them as soon as possible, and in the form that makes sense." (It is widely anticipated that the equity crowdfunding portals will be able to start operations in January 2013).
CrowdFund Local is being designed as a packaged service for municipalities of all sizes whereby they can pool their local leadership to establish a crowdfunding platform or on-ramp for their local businesses. "We are anticipating the participation of the local elected officials, community banks, the chamber of commerce, economic development board, community-based business incubators, etc.," said Marlett. "Further, it gives our member portals first access to hundreds of thousands of entrepreneurs across the country looking to utilize crowdfunding."
Anthony Edwards, NLCFA's CrowdFund Local Committee Chair, said, "Communities all across the country recognize the need for an economic reconstruction, which requires creation, innovation and capital investment. While there is no shortage of entrepreneurs ready to fulfill the void, it is the capital piece that has remained missing until now. With Congress's authorization of crowdfund investing, all Americans will now have the opportunity to invest in businesses within their communities, and economic growth on Main Street can flourish again." Edwards co-founded and leads CF Offerings, www.CrowdfundingOfferings.com, a crowdfunding portal based in Colorado.
"A key area of need is for local businesses to get the capital, the investments they need," said Marlett. "The inability of their community banks to loan to them hurts both the entrepreneur and the bank. But with crowdfunding, now the community bank can compete and participate by lending to local entrepreneurs who have raised operating capital from the 'crowd'. Our goal is for these opportunities to be made available to a community through the CrowdFund Local initiative in tandem with our member portals."
In March 2012, the Federal Reserve issued a study on the shock to the community banks in America since Fannie Mae and Freddie Mac were put into conservatorship in September 2008. In the three+ years since, over 600 community banks suffered more than $8 billion in investment losses directly from the take over, leading to an estimated aggregate lending drop among these banks of over $4 billion. "When you take into consideration the effect of the overall economic collapse," said Marlett, "we estimate the collective drop in community lending during that period soars to over $20 billion." Therefore it is of little wonder that local businesses have not able to get the loans they need to grow, hire, or even survive.
A classic example is the Florida catering business of Maurice Lopes, who also recently launched his own crowdfunding portal, Early Shares www.EarlyShares.com. In addition, he serves on the board of the NLCFA. "No matter how profitable our catering service has been lately, we were unable to get the loans we needed for expansion," said Lopes. "Crowdfunding will be the answer for thousands of small businesses like mine, nationwide. We just need to get it into the hands of the local communities, and that is where CrowdFund Local comes in."
"We are starting with a strong 'listening period'," added Edwards. We have established, and will begin promoting a page on the www.NLCFA.org site where municipalities, chambers, etc. can come online and tell us about their particular needs, methods, and limitations," said Edwards, adding, "It is important that CrowdFund Local be both flexible to a number of different types of municipalities, and yet efficient and easily adaptable in conjunction with NLCFA member portals which will provide the actual portal support for the local crowdfunding on-ramps."
Lopes said, "This is what crowdfunding is best designed for: helping small businesses find the capital they need by selling shares of themselves into their local community." All community banks, chambers of commerce, economic development boards, town governments, etc. are invited to come to www.NLCFA.org and take the brief survey and get involved.
"When your investment of $5,000 (alongside many other similarly situated investors) helps a local pizzeria add another oven, and you then own part of that restaurant and are dedicated to its success…guess where you will first think to go eat?" said Marlett. "It is a circle of community life type of thing."
SOURCE National Crowdfunding Association