"[Local investing] takes the Buy Local movement to the next level-"Invest Local"-and poses the question: What if everyone invested 5 to 10% of their assets in local and community investments?" Malaika Maphalala, a financial advisor with Natural Investments LLC, pointed out in a post at the Springboard Innovation blog.
According to Van Patten, a proponent of local capital formation, these groups around the country and the world can use MM's technology to communicate with each other, share information and syndicate deals to broader audiences. And both national organizations and their regional chapters can have their own branded portals and local identities yet remain connected.
"Mission Markets is a hub with all the spokes and hubs around it," he says.
And it's not limited to local investing. Other groups developing their own branded portals include a U.S. Government agency, several community development finance institutions, an Alaskan Indian tribe, community foundations, environmental NGOs, universities with quasi-incubators, and four foreign organizations in Asia, Europe, and Latin America that want to establish their own impact investing exchanges.
But while the JOBS Act will allow more entrepreneurs of all stripes to raise funds with exemptions from securities laws, it's caveat emptor for investors. "There's going to be a lot of junk out there," Van Patten says. "It's not us. The investor has to screen what the junk is."
MM has embedded mechanisms to help investors to do just that. For one thing, it will be tiering companies based on the amount of documentation those companies provide. For example, the top tier will only include companies with audited financials, whereas the second tier would not require audits and may only include pro formas.
"Tiering companies does not mean [a particular] company is a fantastic investment opportunity," Van Patten says. What it does mean, he adds, is that the company has gone through some form of due diligence-perhaps by a third party-and that it has a lot of documentation that could include a background or fraud check they paid for.
A background check for fraud is important, of course, but it's hardly sufficient.
In terms of the due diligence required for determining whether a company is a good investment opportunity, MM has embedded capabilities for investors to crowd-source their knowledge in a manner somewhat akin to the mechanisms on Amazon.com. If a potential investor knows a lot about water, for example, she can share her comments and rate the company's technology or opportunity based on what she knows.
"The cumulative comments of people give it an overall score," Van Patten says. "These companies will rise to the top, and investors will be able to focus more on opportunities that have been reviewed, with due diligence already attached to them.