Local Investment Project

Concept

Local businesses are the engine of a regional economy. They create jobs, provide goods and services to residents and visitors, generate tax revenues, and in general are a reflection of the economic vitality of a region. One of the challenges for local businesses, both existing and new, is finding capital to grow their businesses. Sun Valley Economic Development (SVED) believes that finding ways to support investments in local businesses could be a key driver to the growth of the Sun Valley regional economy, and has sponsored the development of a Local Investment Program (LIP) to address this need.

Overview

The concept of developing a Local Investment Program started taking shape at the 2013 SVED Economic Summit with a keynote address by Michael Shuman, author of Local Dollars, Local Sense. As Michael pointed out, while most investment dollars still flow to Wall Street and to major high-tech regions, there is a growing movement around the country to “invest locally.” The Local Investing Resource Center now counts scores of local investment organizations investing in hundreds of local companies (see graphic). After Michael’s visit, SVED started putting into place elements of a local venture development, mentoring and investment ecosystem, starting with development of the Ketchum Innovation Center and the Mentors and Advisors Program. With the development of the Local Investment Program, we believe that we have created the third tool to attract entrepreneurs and businesses to relocate to the Sun Valley region.

Areas of Focus

Businesses are typically funded via a variety of sources:

•       Maxing out personal savings and credit cards

•       Tapping gifts/loans/investments by friends and family members

•       Taking out bank loans requiring collateral

•       Seeking government grants, loans and tax incentives

•       Seeking investments/loans from Angels or pooled-capital Angel groups

•       Seeking equity investments from professional Venture Capital firms

While there may be local companies who gain the attention of professional venture capital firms, the focus of the LIP program is to cultivate local angel investors interested in supporting local companies while generating acceptable investment returns. Some of these companies will have the potential for “exits” that can generate returns on equity investments. Others may be more appropriate for structured loan instruments, e.g. “revenue-based loans” that provide a guaranteed return via revenue sharing with investors. To increase deal flow and increase the odds of good returns, the LIP program will also seek to syndicate with other Angel groups in Boise, Montana, Seattle and Portland.

People and Processes

Sun Valley Economic Development is working with the Boise Angel Alliance, which is closing their third fund, to leverage their processes and procedures as we launch a local pooled-capital fund. We are in the process of identifying homeowners in the Sun Valley region who would be interested in shifting a portion of their investment portfolios from Wall Street to Main Street. While this will certainly include a number of local accredited investors, we are also examining opportunities for smaller unaccredited investors to pool capital to make structured loans to local businesses.

Prospective investors interested in supporting local companies should contact Sun Valley Economic Development or a member of the SVED Local Investment Committee to learn more.

Harry Griffith

P.O. Box 4380 | Ketchum, Idaho 83340

Phone: 208-721-7847 | Email: Harry@SunValleyEconomy.org

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