This commentary is by Robert Miller, of Shelburne, who is CEO of VSECU and a former commissioner of the Vermont Department of Economic Development.
When you enjoy a Vermont-made tortilla chip dipped in Vermont-made salsa, it not only tastes good, it does good.
The money you paid for the chips and salsa supports a local business that employs Vermonters, who in turn support other local businesses with the wages they earn. Perhaps a local farmer even grew and harvested the tomatoes for the salsa and then supported the local economy with their earnings.
Still, despite the success of the salsa maker and other small businesses, Vermont’s entrepreneurs can’t always count on traditional financing to fuel their growth. Access to capital to grow a startup or expand a small business remains a significant barrier for too many companies. Locavesting notes that “big banks approve just 2 out of 10 small business loan requests. The odds are worse for women and minority-owned firms: Just $1 out of every $23 in small business bank loans goes to women-owned businesses, for example, even though they represent 30% of all small firms.”
Here in Vermont, things are different.
Local credit unions and community banks, as well as Vermont Community Loan Fund, Community Capital of Vermont, and others are doing their part by providing small business loans and access to capital. And despite the investments of Fresh Tracks Capital, the Vermont Center for Emerging Technologies, angel investors, and others, fewer than 1 percent of Vermont businesses receive venture capital funding.
Here’s the good news
The good news is that revisions to Vermont’s securities regulations allow for crowdfunding to support local businesses and provide a local investment option for Vermonters. As a result, a new crowdfunding portal called “Milk Money,” formed to connect Vermonters interested in investing local with local businesses in need of capital.
While investing in startups was once restricted to accredited investors only, now any Vermonter can invest in a local business with as little as $250.”
Milk Money makes it easy by working with local companies and delivering information about them to potential investors like you.
At VSECU, we partnered with Milk Money founders Louisa Schibli and Janice Shade because they embody our belief that great things happen when people work together for a common cause. Our member-owners have been helping each other for generations, and Milk Money is another opportunity for us Vermonters to support each other through our local businesses. By allowing everyday people to invest in their neighbors, Milk Money can make great things happen.
In fact, since August of 2016, Vermonters have already invested $100,000 through the program.”
Here’s how it works
Any Vermonter can go to Milk Money and register.
Once your registration (proof of Vermont residence) is confirmed, you can explore the companies seeking capital to support their growth. These businesses have met with Milk Money staff to complete their business plans, financial projections, and offering documents. And all of their information is reviewed by the Vermont Department of Financial Regulation prior to being uploaded to the Milk Money website.
Next, you decide how much you’d like to invest
You’ll decide how much and choose a company to receive your funds. You write a check to the company, send it to Milk Money, and then it gets deposited into the company’s escrow account at VSECU. Once the company gets enough investments to meet a “Minimum Offering Amount,” the company can transfer investment funds into its operating account and start using them to grow their business. Milk Money then sends you an investor packet containing your investment documentation and certificate via certified mail. Within three to six months, you should start to receive periodic updates from the company in which you invested that will let you know how it is performing.
By keeping a greater portion of our money in local businesses, we strengthen our economy; create jobs for our residents; and contribute to the health and vitality of our communities. Locally owned, small businesses are at the heart of what makes Vermont such a special place. Now, thanks to forward thinking regulators and lawmakers and Milk Money, every Vermonter can do more than just buy local; they can invest local.
If you find this Commentary interesting, check out this one of the original press conference when VSECU and Milk Money announced their collaboration.
CLICK HERE to see the video press conference and learn more.