Crowdfunding is an online tool for engaging people across the financial spectrum to invest money as loans or gifts to projects advertised on varied platforms. Once mostly associated with microfinance in the poorest parts of the world and with musicians and artists, it is now increasingly being used as a fundraising tool for farms and food businesses.
There are two current projects in Maine that are using a popular platform called KickStarter that provide good examples on how crowdfunding works. The Maine Grains campaign is using KickStarter to purchase and install the remaining bins and ductwork needed to open their grist mill. Bahner Farm’s campaign is to provide funding to build a farm stand.
The collective and direct aspects of Crowdfunding without high costs for intermediaries, has gained a significant following. Historical examples from the 70’s include Grameen Bank and Foundation focused on microfinance in the poorest parts of the world while more recent examples since 2000 are Artistshare and KIVA with a variety of project offerings. Criteria for participation as vendor or customer vary and can be found on related web sites. There are many platforms currently functioning throughout the U.S. and abroad such as Seedrs and Funding Circle (UK), GrowVC (Hong Kong), and LendingClub.
Developing awareness of this “P2P” (person-to-person) financial tool for business and equity investments has resulted in exploration of varied options and the complexity of SEC regulations. National legislation passed in March 2012 through JOBS (Jumpstart our Business Startups) would allow unaccredited investors opportunities to invest up to $10K or 10% of their income (whichever is less) in varied sector businesses. The SEC has 290 days to review this bill so there is no clarity at this point about final legal approval and implementation. Public reaction to this option seems quite mixed. While many agree with regulations, they also believe that those created by the SEC in the 1930’s need to be updated in ways that suit our current social and economic environment.
Conferences and articles related to a new economy regularly feature the topic of crowdfunding and new platforms and businesses are focusing on what many consider to be a revolution in democratic investment opportunities. It will offer a financial vehicle for many more Americans to participate, provide new opportunities for diversification and profitable investing, bring increased awareness to creative projects and build a bridge to venture capital in emerging sectors like local sustainable food systems.
A partial list of resources follow which will lead you to more information if you’re interested:
Locavesting by Amy Cortese
Local Dollars, Local Sense by Michael Shuman
People & Platforms:
Spencer Taylor/Launcht; www. Launcht.com; firstname.lastname@example.org; 802-238-0319
Kevin Lehman/ThreeRevolutions; www.threerevolutions.com; email@example.com
Other Kickstarter Food Projects in the U.S.