Crowdfunding Is Working for Women and Minority Entrepreneurs
V.2, N.40
This week's top news item is a report from KingsCrowd summarizing the performance of investment crowdfunding in 2023. Among the key findings:
Businesses led by women and people of color continued to do disproportionately well: 21.7% of all capital raised was secured by women-run companies, and 28.4% by minority-led companies. As one point of comparison, when it comes to venture capital funding, 2.3% goes to women-run companies and 1% to Black-run companies.
Roughly 1,150 small businesses raised $420 million through crowdfunding last year, a total down slightly from the previous year.
79% of the companies that tried to raise capital through Regulation Crowdfunding (Reg CF) reached their minimum goal; the average amount raised was $366,000.
On the top ten platforms, the average successful campaign had 408 investors who invested an average of $1,190 apiece.
A concerning figure is the growing concentration (and reduced competitiveness) of the crowdfunding sector. Of the 92 federally registered portals, the top two (Wefunder and StartEngine) accounted for 59% of the year’s business, and the top four accounted for 75%.
If you haven’t done so, please check out the KingsCrowd site, which provides terrific information about the crowdfunding industry. The people running the site have also provided us with the raw data that we use to bring you listings of hot new local investment opportunities.
Shameless Plug: Some of you have asked what happened to the MSJ listings. As we alerted you, the planned migration has now occurred: They have moved to the paid subscription-only MSJ Extra!, which published its first edition last week.
If that’s not a good enough reason to subscribe, MSJ Extra! readers also enjoyed an interview with Kevin Jones, co-founder of Neighborhood Economics, who described his favorite grassroots investment funds across the country. An excerpt is below.
Meanwhile, as you ponder subscribing, in this free issue you will find three more stories to complement the crowdfunding report:
A recovering banker makes the case for public banking, which is beginning to take off in California, Illinois, and Massachusetts.
A new report from the Brookings Institution documents that, even though household wealth has increased in the United States, so has the yawning difference between the wealth of median white and median Black households. (The gap is now an astonishing $240,120!)
Washington State is now partnering with local banks to provide more affordable housing.
Below the news is an excerpt of what free subscribers missed in the MSJ Extra! January 25 edition. Again, please consider subscribing through this handy link.
~ Michael Shuman, Publisher
NEWS
Reg CF 2023: Top Platforms and Year in Review, KingsCrowd (January 8)
A Banker’s Case for Public Banking, Nonprofit Quarterly (January 17)
Black Wealth Is Increasing, But So Is the Racial Wealth Gap, Brookings (January 9)
Seattle’s Newest Housing Hero: Credit Unions, Next City (January 4)
MSJ EXTRA! TEASER
On January 25, we launched the inaugural issue of MSJ Extra! Each post includes an interview with a prominent policymaker, book author, or other rabble-rouser. Our first such interview was with Kevin Jones, co-founder of Neighborhood Economics.
Kevin Jones runs Neighborhood Economics along with his wife, Rev. Rosa Lee Hardin. This national organization promotes the use of community capital to fight poverty, injustice, and racism. They also co-created SOCAP, which became THE place for impact investors and social entrepreneurs to gather annually.
Here’s a snippet of Michael Shuman’s interview with Kevin Jones.
MS: SOCAP was a child that you and your wife Rosa Lee birthed and raised from infancy, and it became incredibly successful. Why did you decide to abandon and sell it? Was the child badly behaved?
KJ: We started SOCAP to help catalyze a new way of investing that would let you think and act like a philanthropist. We believe everyone can use their money to do good in the world and fulfill their dreams. We wanted SOCAP conferences to be at the intersection of money and meaning. But in impact investing, once it became clear that some deals could do well at market rates, that became the predominant goal. Money took over. Do good with high profits and then figure out how to do more of it. I realized that SOCAP was a catalytic, powerful force that only worked for some people with resources. I began to focus on the people and places SOCAP did not reach and was not built to reach—specifically, the 90% of African-American-owned businesses that remain stuck as sole proprietorships because they lack the friends-and-family money that could enable them to grow.
MS: Hence the birth of Neighborhood Economics. So how is this new organization, which also holds large conferences, different from SOCAP?
KJ: SOCAP is for mission-focused businesses built to scale; that is, they have access to capital, grow fast, become more competitive, and have a massive impact. Most companies and local economies are not like that. For them to succeed, they need to have the right partners, the right relationships with stakeholders, and the right sources of capital. These are the businesses and communities that Neighborhood Economics focuses on. We aim to focus on place-based businesses and bring in new innovative funding solutions, cultivating economic power in neighborhoods left behind by the traditional economy. We also bring in the philanthropic foundations backing those new financial innovations. And we add faith-based institutional funders working in the same zip codes and on the same problems as the large foundations.
PARTNER VOICES
Baltimore Rises As a Tech Hub Focused on Equi-Tech, Superpowers for Good (January 16)
Project Equity’s Employee Ownership Catalyst Fund, ImpactAlpha (January 16)
Choose B Corps, Co-ops, and The Fourth Sector, American Independent Business Alliance (January 15)
Look Both Ways Before Jumping Into Crowdfunding, Crowdfund Better (January 13)
Faith and Economic Cooperation, Neighborhood Economics (January 5)
Marjorie Kelly & Wealth Supremacy, Abrams + Angell (January 3)
NOTABLE NEW RESOURCES
Mind Your Business? Expanding Democratic Business in the UK, Bright Blue (January 18)
The Worker Co-op Solution, 21 Hats (January 16)
The Role of Employee Ownership, Employee Ownership Australia (January 10)
EVENTS
Crowdfunding & SBA Lending: A Conversation - Virtual Event. February 6, at 2 pm ET. Register here.
Worker Cooperative Startup Webinar - Virtual Event. February 7, at 3 pm ET. Register here.
SuperCrowdHour: Meet the CfPA - Virtual Event. February 21, at 1 pm ET. Register here.
Remaking the Economy: Building Regional Solidarity Economies - Virtual Event. February 21, at 2 pm ET. Register here.
Neighborhood Economics - In-Person Event. February 26-28. Register here.
Moving Minds & Money to Transform Arts & Culture Investment - In-Person Event. March 8. Register here.
SuperCrowdBaltimore - In-Person Event. March 21. Register here.
ICYMI
Makers Making Their Own Marketplace, Co-op News (January 5)
Regulation Crowdfunding Issuers More Resilient Than Traditional Companies, Crowdfund Capital Advisors (December 18)
Dollar Stores are Dollar Stores Are Killing Some Supermarkets. Could Co-ops Help Cities Fight Back? Fast Company (December 12)
Multi-Stakeholder Media Co-op: The Great Central Gazette, Co-op News (December 6)
JOBS BOARD
Black Farmer Fund is hiring a Development & Investor Relations Director.
Co-op Cincy & Co-op Dayton are hiring a Communications Program Manager.
Mission Driven Finance is hiring a Real Estate Asset Management Senior Director, a CARE Real Estate Development Director, and a Fund Operations Manager.
US Federation of Worker Cooperatives is hiring a Development Director.
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About The Main Street Journal
The Main Street Journal aims to catalyze the movement of $50 trillion from Wall Street to Main Street to facilitate economic development and economic justice. It’s sponsored by the National Coalition for Community Capital, with grants from the Heron Foundation, Wallace Global Foundation, and the Bondi Foundation. We welcome feedback about everything, from our design to content. Also, we welcome suggestions of other groups to involve as partners and additional information to include. Please send ideas to Jen Risley at jen@main-street-journal.com.
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Jen Risley - Editor
Jessica Landman - Strategic Advisor
PARTNERS
Abrams+Angell | American Independent Business Alliance | Candide Group | Community-Vision Solutions | Council Fire | Crowdfund Better | Crowdfund Capital Advisors | Cutting Edge Capital | Democracy Collaborative | Exit to Community Collective | Fair Food Network | Impact Finance Center | ImpactPHL | Initiative for Local Capital | Institute for Local Self-Reliance | The Kassan Group | Mission Driven Finance | National Coalition for Community Capital | Natural Investments | Neighborhood Associates | Neighborhood Economics | New Majority Capital | Next Egg | Nonprofit Quarterly | Ownership America | Ownership Matters | Partnership for Southern Equity | Project Equity | Project for Public Spaces | Prospera Partners | Raise Green | Revalue | Schumacher Center for a New Economics | Shelterforce | Slow Money | SOCAP | Sun Valley Institute for Resilience | The Super Crowd Inc. | Transform Finance | Uwharrie Bank | Village Well | Zebras Unite
We welcome any nonprofit or for-profit committed to local investment as a partner. If your organization is interested, please contact Jen Risley at jen@main-street-journal.com.