Community Capital is simply money that comes from the community and goes to the community. The term Investment-Based Crowdfunding can be used to describe the practice of directing capital from investors to small businesses. This type of democratized capital that yields a return for its investors can be a viable financial resource to start or grow a small business.
Many small businesses have difficulty gaining access to capital through traditional financing sources. For women, people of color, those with less than perfect credit, or even startups, it can be even more difficult. Investment-based crowdfunding can be a game-changer for small businesses.
Small businesses are the cornerstone of what makes Michigan’s downtowns unique and authentic. Investment-based crowdfunding provides an innovative financial tool to support the creation, retention, and growth of businesses on main street.
In a partnership between the MEDC and the Michigan Municipal League as well as a team of Community Capital activists across the state, a storytelling booklet, called Community Investment, Community Growth: A Retrospective in Michigan Crowdfunding was produced in 2019. We highly recommend reading the guide to learn more about the differences between donation-based and investment-based crowdfunding and read case studies about both kinds from around Michigan.
Need help understanding Community Capital from the lens of an individual or potential local investor? In partnership with one of Michigan’s most dedicated community capital champions, Revalue, a series of videos have been developed that will provide additional information in local investing:
The purpose of the “Investment-Based Crowdfunding Field Guide” is to provide community development organizations, including local
units of government, downtown development authorities, Main Street programs, and other economic and community development
organizations, with information to help support a small business owner interested in pursuing investment-based crowdfunding as
a means to access capital to start or grow a business.