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Dear 2016, hope the door didn't hit you too hard on the way out! That may be how we feel after an ugly year of partisanship and injustice. But 2016 wasn’t all bad. In fact, it may go down as the year that finance was truly democratized.

The final piece of the JOBS Act fell into place in May, and small investors poured nearly $19 million into crowdfunded ventures before the year was out. And that was mostly before Indiegogo threw its hat into the ring. The SEC adopted new and improved rules for intrastate crowdfunding—excellent news for the 34 states with such laws. Funding sites such as Groundfloor, Streetshares and American Home Owners Preservation made novel use of Regulation A+ to open up their investment offerings to everyone. Stock markets were reimagined. More women and people of color started new ventures, and funders began taking notice. And financial innovation finally began to filter down to community-scale finance. 

Here are some highlights from our 2016 coverage that give us hope for the year ahead.

These New Crowdfunding Sites Seek Social as Well as Financial Returns
Is crowdfunding getting a conscience? The JOBS Act was supposed to open up new pools of capital for small businesses, especially those run by women, minorities and social entrepreneurs who have traditionally struggled to raise funding. There's been a decent smattering of these ventures making use of the new rules, but many of the offerings on tap are the usual tech startups and non-diverse founder teams. Now a new crop of funding platforms is putting social impact front and center. We profile four mission-driven funding sites that are launching soon.
PRIs: An Underused Funding Tool for Family Foundations and Social Enterprises
Mission-based entrepreneurs and investors have traditionally faced a narrow set of choices. Nonprofits could solicit grants, while for-profit ventures sought bank loans or venture capital. By adding a social mission to their business models, social enterprises are often simultaneously ineligible for grants and not competitive enough for traditional bank loans or venture investment. Program Related Investments (PRIs) have been gaining traction as a middle ground between charitable grants and for-profit investments.
New Tool Aims to Fill a Funding Gap for African American Entrepreneurs
Entrepreneurs are routinely told to reach out to their friends & family for initial seed capital. Yet the 'friends & family' concept can be baffling to those who don't come from privileged backgrounds, and downright maddening to African Americans, who, after decades of systematic discrimination, trail behind whites in household wealth. To fill that gap, a group of innovators has created a "Friends & Family" CD that will fund loans to early stage entrepreneurs of color, starting with a pilot project in Oakland, Calif. 
Five Cities Will Test New Muni Bond Crowdfunding Platform
Music venues in Austin. Affordable housing in Silicon Valley. And fire trucks in Lawrence, Kansas. These are some of the first public works that will be funded on Neighborly, a platform that is bringing the concepts of crowdfunding to a complex corner of the market that has become bloated with middlemen: municipal finance. Neighborly allows municipalities and other civic entities to offer muni bonds directly to their constituents to fund public works, such as schools and infrastructure. As CEO Jase Wilson says: “It’s a new era of civic finance.” 
 
Imagine a mutual fund that invests only in local businesses or infrastructure, or maybe in social enterprises or women-owned ventures. They mostly don't exist, at least for average investors. Why? Investment funds are subject to two layers of regulation (the Securities Act of 1933 and the Investment Company Act of 1940) that make them too costly to set up. The good news is, there are exemptions that make community investment funds possible. Brian Beckon of Cutting Edge Capital outlines 4 models, from real estate funds such as one in Fresno to diversified business funds that are aligned with an accelerator or incubator, that can be used to set up local funds. 
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We will continue covering the positive developments in community-based finance in the year ahead, so please check back with us at www.locavesting.com for the latest (you don't have to wait for the newsletter!) And make use of our educational resources for investors and entrepreneurs.


 
     
 



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Wishing you peace, purpose & perseverance in the year ahead. 

Amy

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