Would you like to help your local restaurant stay in business? Or, if you own the local flower shop, would you like to raise the money you need to expand from you patrons and neighbors?
These are the types of questions Ken Staut, CEO of GrowthFountain, asks.
GrowthFountain is a new crowdfunding platform that matches local businesses with those who want to invest locally in a private company. Launched this week, the platform will work through credit unions to make the match-ups.
So far, the new platform is working with one credit union, Digital Credit Union, and has three projects under way.
Cogent Education in Athens, Ga., wants to raise $100,000 to help teach difficult science concepts to students. Venue, based in Hoboken, N.J., is a mobile-based application that allows the user to book parties of all sizes. The firm wants to raise $30,000. Oma’s, based in Chicago, wants to raise $25,000 to start mass producing the cherry-infused vodka it makes from Michigan cherries.
Each firm has started to raise funds through GrowthFountain.
Staut, who comes from a Wall Street background, says he has been interested in small local businesses since he was a child and his father owned a business in Pittsburgh.
“I saw firsthand the positive impact a small business can have on the local community -- and also witnessed the difficult nature of accessing the capital and resources necessary to grow,” he says. “ When I read the JOBS Act, I immediately realized how revolutionary crowdfunding for small businesses would be. It is the perfect synthesis [which] combines my grass-roots entrepreneurial spirit with my Wall Street finance background,” he says.
GrowthFountain operates the platform and the credit union acts as the matchmaker, Staut says. The funding is provided by the investor in exchange for an equity share in the company. For instance, a contract could stipulate the investor gets 5 percent of revenue of the company each year until he or she gets two times the investment back.
“We are partnering with credit unions because their mission is to help the local community and they are member owned,” he says. “Investors can invest as little as $100.”