Although small businesses account for almost 80% of job growth, startups have a hard time raising money.  Equity typically is found through the generosity and faith of “friends and family”.  When big businesses need money, they can turn to the stock market for issuing bonds and securities.  But filing the required paperwork to “Go Public” with the Securities and Exchange Commission can easily cost $300,000, not to mention the ongoing cost of reporting.  Short of this, it has been essentially illegal for a small business to turn to their neighborhood to offer “securities” (loans or equity in their company). At the same time, ethical investors face the other side of the problem. There are limited options for conventional investment.  They can invest in listed stocks and bonds; they can buy real estate; they can burry gold in their yard.  But, unless they have entrepreneurial “Friends and Family,” they cannot put money back into their own community.

In the mid 2000’s fundraising sites like Sellaband, IndieGoGo, and Kickstarter gave individuals a way to fund a tour, finish a movie, create a product or donate to charity, etc.  Since 2009 Kickstarter alone as raised $1.6 billion from millions of users, for thousands of projects.  Other types of crowd funding sites began to appear like GrowVC, which aims to connect start-ups to investors. In 2012 the Jumpstart Our Business Startups Act (the JOBS Act) was passed, essentially allowing crowd funding for equity.   Websites like Fundrise, Prodigy Network, and Realty Mogul have popped up, allowing accredited investors (those with a net worth of $1 million, or with income exceeding $200,000 for the prior two years) to invest in real estate online.   The goal of the JOBS Act is to eventually allow anyone to invest as little as $100 in similar projects.

Rochester Local Capital was formed in the hopes of bringing local capital together to launch local businesses.  We see enormous potential even now working with accredited investors to finance opportunities in Rochester.  In the near future we hope to be able to offer a menu of investment opportunities in compliance with Rule 506 of the Securities Act.

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