How to Get Started

Review your financial situation

Do you have money to invest that you can afford to lose?  Have you paid off any high interest credit card debt?  Are your non-invested savings sufficient to cover emergencies, and are they working for you at a locally-focused bank or credit union?  Note: IRAs can be invested locally using a tool called a Self-Directed IRA, but there are modest extra costs and paperwork involved.

Define your values statement or theory of change

What is the impact you want your investments to have? Do you want to support certain types of entrepreneurs, e.g. women, people of color, native peoples, LGBTQ, veterans, others? Are you passionate about supporting small farms — whether start-up, growth-stage, or transitioning from retiring farmers to new owners — and/or the businesses that make up the support network to bring farm products to local markets? Are you driven to support Main Street rejuvenation by investing in businesses willing to locate in vacant storefronts and shuttered factories? Perhaps affordable housing, equitable access to home ownership, or other real estate-focused opportunities appeal to you?

Most likely it will be a mix of the above and/or other impacts. Having a sense of the impact you wish to create will help direct your search for suitable investments and identify possibilities to work with other like-minded investors to share due diligence and aggregate investment capital for greater impact.

Do you prefer to invest alone or join an investment group?

If you are just getting started, or prefer to work by yourself, a great place to find opportunities is through investment crowdfunding platforms (Crowdfund Capital Advisors maintains a list of platforms here). Also, be on the lookout for local businesses that are using pre-sales to fund their startup or expansion, and support them.

If possible and preferable, consider joining an investment group in your community. Use our Group Directory to look up nearby groups. Being part of a local investing group can help you build mutually beneficial relationships with other local investors, create connections to local business people that offer investing opportunities, and generally learn how to invest locally in your community.

If there are no local investing groups nearby, consider teaming up with other interested individuals to create one yourself. Check out our Community Builder section for guidance and resources.

Start looking for investment opportunities

Use your connections, including those involved in local investing groups or similarly interested groups, to find out about local investment opportunities. Many communities and local entrepreneur support organizations conduct pitch contests or other business showcase events to highlight local investment opportunities and connect investors with entrepreneurs seeking capital. Check Direct Public Offering listings on CuttingEdgeX and find community investing opportunities listed by state on Investibule. You could even go so far as to tell your favorite local business owner, “If you ever need money to grow or refine your business, I’m a big fan and would be happy to consider a local investment opportunity.”

Be patient and wait until you hear about an investing opportunity that interests or even excites you. Reach out to the people who are offering the opportunity. Unless they have registered their investment offering with regulators in a way that allows advertising, they may only be allowed to offer the investing opportunity to people they have a pre-existing relationship with. In these cases, if you don’t know them already, you can start building a relationship by calling or meeting up in person. Ask about who is involved, the history of the business or project, what opportunities they are pursuing, and how you can support their efforts.  If the relationship develops in a promising way, you may eventually be able to take the next steps.

Do your due diligence

Once you have a potential investment you’re interested in, do your due diligence. This step is important enough to warrant its own section on our website. Don’t write a check until you’re comfortable with Evaluating Local Investments, a step-by-step guide in this process.

Be a Value-Added investor

Once you have invested, stay involved! Your money is an important show of support to a growing business, but so is becoming a good “brand ambassador.” Encourage your friends, family, and neighbors to support the business with their purchasing power — this can have the dual benefit of driving sales and improving the financial success that will lead to your return on investment.

In good times, you will enjoy financial and community returns on your investment, and in tough times, your continued support can help a local small business get through. You are now a part of a growing movement that helps build community ties, strengthens community resilience, and increases local prosperity using your investment dollars.