Your Local Investing Group Is Up & Running. Now What?

There are four core activities that high-functioning local investing groups need to be able to perform consistently. Here is the quick list, and then we will dive into greater detail on each.

1. Self-organize by holding periodic business meetings

2. Build the local economy ecosystem through community outreach

3. Expand the capital base by recruiting new members & orienting them properly

4. Connect investors and businesses by organizing business showcases & follow-up meetings

First, your group must stay in sync and make collective decisions. Email lists are good for keeping in touch about issues as they come up, but they are not a substitute for meeting regularly in person. New groups should meet in person more often, perhaps once a month, while established groups may meet a few times a year. Meetings are necessary for a variety of reasons: Members (or just the leaders) can evaluate the group’s effectiveness (especially after holding events), plan for future events, refine their processes and agreements, and rotate volunteer roles periodically. It can be helpful to have someone take notes and email them out to the whole group, to keep everyone on the same page.

Building Your Local Economy Ecosystem

Well-developed local economy ecosystems are important because local investing does not occur in a vacuum; it thrives on active networking, referrals, and mutually beneficial relationships within a community.

Second, local investing groups should put effort towards being key players in building a healthy “local economy ecosystem.” This is a term we use to describe a network of well-connected individuals and organizations that are interested in seeing local small businesses and nonprofits succeed in their community, and are motivated to help make that happen. Well-developed ecosystems are important because local investing does not occur in a vacuum; it thrives on active networking, referrals, and mutually beneficial relationships within a community. Ecosystem allies will spread the word about your local investing group and your mission to people that need to know, such as businesses and other investors, and will refer investing and networking opportunities back to your group. In addition to your group’s members, ecosystems can include members and leaders of the following locally-based groups as well as representatives of locally-focused chapters of larger regional or statewide groups:

(1) Business organizations, such as Chambers of Commerce, AMIBA, and local industry groups in sectors that your group may be focused on.
(2) Economic development groups such as Economic Development Councils (EDCs), Small Business Development Centers (SBDCs), and business incubators.
(3) Financial institutions and independent financial professionals such as bankers, financial advisors, and accountants.
(4) Educational institutions, especially those that teach entrepreneurship and business-related classes in sectors that your group may be focused on.
(5) Attorneys, especially those that specialize in business and securities law.
(6) Government, including executives, councilmembers, legislators, and their staff.
(7) Journalists and media that can help report on local investing developments.
(8) Nonprofits that are active in local investing, such as community loan funds.
(9) Sustainability groups, such as Transition Networks, that want to increase local financial self-reliance.

Note  SBDCs, incubators, and similar small business technical assistance programs, entrepreneurship courses (and those that teach them), private business consultants, and helpful financial professionals are extremely important for your ecosystem because they can help businesses that want to raise money locally with their business plans and entrepreneurship skills, leading to a greater chance of business success and, in turn, better investment outcomes and more positive community impacts.

To begin actively developing your local economy ecosystem, your group should make a list of who might be valuable parts of the ecosystem, and decide which member or members are best connected to those groups or individuals, and best placed for reaching out to them. When reaching out, the member(s) should tell the potential ecosystem participant about the group, its mission (reflecting how the group intends to help the community), prominent group members that they might know or have heard of, how the group works, and what the potential participant can do to support the group. The member(s) should answer any questions as best they can and offer themselves and other group members for follow-up, if needed. If it seems appropriate, offer to add them to your group’s email list and/or invite them to your next Business Showcase. Some of these people may join your group and become valuable members, as well. Over time, your local investing group will likely find this kind of networking to be very rewarding, and a key ingredient of success.

Recruiting New Investors

Third, your group should recruit new investors and grow its membership. This is important to help build the amount of investing capital that’s available to help finance local small businesses and nonprofits in your community. A growing group has a dynamic energy that is exciting and fun, and will attract even more potential members.

It is crucial to know that just signing up new members is not enough; they must be given an orientation by more experienced members of the group (ideally, members that have made local investments already), and the opportunity to ask lots of questions and observe the members in action at group meetings, business showcases, and follow-up meetings with entrepreneurs after showcases. New members will typically only make investments if they feel well supported, comfortable, and get to experience the benefits of local investing for themselves. Feel free to refer them to the guides on this site to help them learn the ropes.

If possible, begin your outreach efforts with reputable, well-connected investors who already share your values about supporting local small businesses and who may be more open to investing some of their money locally, even with the extra work it entails. Investors tend to know one another, so once you have a few well-respected investors on board, they can more easily recruit others to the cause. Often, the people that are most open to, and comfortable with, investing in local small businesses were successful entrepreneurs themselves. They already understand the small business environment, how to read financial statements and projections, how to evaluate management, and best of all, they may be open to mentoring the business people they invest in. These kinds of investors are also great because they can help inspire confidence in novice local investors that may not have entrepreneurial backgrounds. Reach out to local citizens that fit this profile to see if they might be willing to join your group or support your efforts.

While local investing groups can grow organically through peer-to-peer networking and referrals over time, they can grow more quickly if the group organizes effective community outreach events. However, for an investment club, doing any public recruiting of members (or recruiting potential members with whom there isn’t a substantive preexisting relationship) will violate the Investment Company Act of 1940. Therefore, the following information only applies to investor networks. These open events, which could happen annually, are intended to educate interested members of the community about the local investing group, and typically lead to a burst of new member applications and investing opportunities. The event organizers should invite potential investor members, local business people, members of the local economy ecosystem, and of course, all members of the group itself. Arrange for a member of the group to speak about the group, its mission, who its members are (have them stand up), what it has accomplished, and how people can help support the cause. This can be done with the help of a slideshow (PowerPoint or similar) presentation. Arrange for a reputable local business person that has been a recipient of a member’s local investment to stand up and speak about their experience working with local investors and what that has done for their business. Brief Q&A sessions should follow the speakers, and all of the speaking should be done within an hour at the most, so that networking and mingling can take place while the attendees have good energy.

For clubs and members-only networks, your group’s website should explain your new member process. Offer a form that potential members can fill out, sharing their contact information and other relevant information, such as who they know in the group. Most applicants will be known to at least someone in the group, since people most often join after receiving a personal recommendation to do so. Ideally, your group will have a Membership Coordinator that receives the applications and coordinates the new member process, which could include forwarding the application to a membership committee or the whole group, possibly getting a decision back, and notifying the applicant of the status of their application. Applicants that are accepted into the group will need to sign the Membership Agreement and be oriented with useful information about the group and how it works, ideally in person so they can make personal connections with the members. Group orientation sessions can be held if the group has a large number of applicants at the same time, such as may happen after a community outreach event.

Connecting Investors and Businesses

Fourth, and perhaps most importantly, the group must connect investors and businesses. A great way to create the relationships that lead to local investments is to organize periodic gatherings to showcase local businesses and nonprofits that want to connect with the community and potentially raise investment money. These events are similar to community outreach events, but the whole point is to support the presenters, who represent local small businesses and nonprofits.

The events can be open to the public; private for group members only; or private for group members and others, such as potential group members, ecosystem members, and other interested guests. However, businesses should speak carefully about their current, future, and/or past investment opportunities. Thus, the focus of a local business showcase should not necessarily be on financial information but on the businesses themselves and the people behind them: who they are, the values that matter to them, their history in the community and elsewhere, the impact they have on the local economy, and the opportunities and challenges they face within the local economy.

These events are also called “pitchfests,” but that term can be misleading, since the point is not to “pitch” investment ideas to the audience—à la Shark Tank—so much as it is to educate the community about the issues and opportunities that specific local small businesses face, and rally support and connections for them. Take a look at Organizing Business Showcases, which delves deeply into the process of creating these events.

The most crucial part of the local investing process happens after a business showcase, when follow-up meetings are arranged between business people and interested group members/potential investors. These meetings can lead to relationships being built, and if things go well, additional meetings can be arranged to discuss and negotiate investment terms, and ultimately, investments can be made. Therefore, it’s extremely important for local investing groups to support and facilitate this follow-up process, which is what leads to successful outcomes for the group. Organizers should provide sign-up sheets for each entrepreneur at the showcase where people can write down their name, e-mail address, and phone number if they want to participate in a follow-up meeting. After the showcase, a meeting can be scheduled at a time that works for the greatest number of people using a website such as, or the old-fashioned way of consulting everybody involved for a time that works for everyone. At this point, local investing networks should stand back and let the individual parties take it from here. Networks should not be involved in the investment research, negotiation, or decision-making process. Clubs, on the other hand, might hold private showcases, form a due diligence committee for each entrepreneur the members are interested in, and have the committee schedule a follow-up meeting with the entrepreneur. For more information on the due diligence process, please read our guide on Evaluating Local Investments.

There are other models for connecting investors with businesses that can be used in addition to, or instead of, business showcases. Some networks have a “master connector” who leads the local investing network (typically an open membership network) and personally introduces investors and business people. Much like a “matchmaking” arrangement would work, the connector arranges meetings between the parties, similar to Business Showcase follow-up meetings, which serve to introduce everyone and pave the way for relationship building and business/investment discussions. Another model, used by LION, invites business people to fill out and submit an online or paper “Business Opportunity” form to the group which shares similar information to what would typically be presented at a Business Showcase (i.e., personal and business history, the business opportunity, but no investment or financial information), plus their contact information, references, etc. These forms are e-mailed to all members, who, if they are interested in meeting with the business person, respond either directly to that person or to the group’s volunteer business opportunity coordinator, indicating their interest and availability. From there, follow-up meetings can be arranged, mirroring those that occur after a Business Showcase. Essentially, this model replaces the showcase with online “introductions,” and while it is not as entertaining and community-building as a showcase, some groups may find it to be a more efficient way to connect people than the relatively work-intensive showcases.

Finally, networks are encouraged to track the local investment activity of their members. An annual confidential survey can gather all sorts of useful information about what local investing looks like in your community, including investment size, average interest rates for loans, percent of showcase presenters that ultimately get funded, and much more. Please share any statistics you generate with us so we can track how local investing works around the country.