A revolution in early-stage finance is changing the way the Black business communities relate to capital formation, real estate development, entrepreneurship, and job creation. Thanks to the passage of the JOBS Act of 2012, a new market is being created that will revolutionize how early-stage investing and community economic development works — It’s called Investment Crowdfunding!
To this end, I personally believe that investment crowdfunding is the most significant piece of financial-based legislation for African Americans since the Emancipation Proclamation 1863 emancipation of Southern slaves.
“If African-Americans shifted just 1% of the $1.5 trillion of their in purchasing power to Black-owned businesses, it would amount to $10 billion invested in Black businesses and real estate development.
That’s not a game-changer. That’s a revolution!
Shifting Dollars from Consumerism to Investment Crowdfunding
May 16th, 2016 the SEC Rulings on crowdfunding intermediaries went into effect and today ordinary Americans are able to collaborate en masse to invest small individual amounts of capital to startups, small businesses, and real estate developments online through investment crowdfunding, and become shareholders in the process. There are two sides to investment crowdfunding capital for Black businesses and inclusive investing for the Black community. According to data from Honeycomb Credit businesses that crowdfund successfully increase their revenue by 60 percent, Investment crowdfunding data points to the reality if the Black community invest in Black-owned businesses they will spend dollars at these businesses where they have a financial benefit tied to the success of the Business.
The Power of Crowdfunding
When the Black community sees the power of investment crowdfunding and begin to pull from their bank savings, mutual fund accounts and begin investing one percent of their disposable income in order to put their money to work in their own communities there will be a change in the economics of Black communities and Black founders will be able to solve problems that impact the global economy. Investment crowdfunding has the power to change how African-Americans from all income levels make decisions about where to spend their money and how to spend that money. Using some of the dollars specifically and intentionally for investment in Black businesses and real estate developers.
From Consumer to Investor
Investment crowdfunding will usher in a radical transformation forever redefining what it means to African-Americans to be crowd investors in America by bringing local crowdfunding into the homes of inner-city community members in the Internet Age. If African-Americans embrace the power of investment crowdfunding then the most socially transformative part of crowdfunding will come from the power of local or community-based investing. One of the major issues negatively impacting these disinvested communities. Investment crowdfunding provides a never-before legal opportunity for inclusive investing by the community members that give Black businesses and developers the ability to raise capital directly from its consumers and community. Investment crowdfunding allows these business owners and developers to tap an entirely new source of investment dollars outside of the traditional funding ecosystem that data demonstrates is racially biased against Black businesses and developers.
The Case for Local Businesses
There is an overwhelming amount of recent research from prominent economists, sociologists, and other researchers who find that small, local businesses are critical to overcoming many of our biggest challenges facing Black communities, from reducing economic inequality to building resilient communities. According to the Kauffman Foundation, new businesses account for nearly all net new job creation and almost 20 percent of gross job creation. Investment crowdfunding not only creates jobs but investing in and purchasing from Black-owned businesses reduces the amount of retail leakage of dollars from these communities thereby increasing community wealth.
Takeaway
According to Local Investing fostering an economy of small-scale businesses may be one of the most effective ways to close the gap between rich and poor. Civic leaders are increasingly grappling with income inequality, and creating policies to foster an economy that’s based on local ownership and community-scaled businesses may be one of the most effective ways to do it. That’s the implication of new research that identifies links between corporate consolidation and the widening gap between the rich and poor. If you want to learn more about how investment crowdfunding can change your business please visit Crowd-Max.com