Sunday, December 14, 2014

Can Crowdfunding Revive Local Stocks Markets?





Back in October, I wrote an op-ed that appeared in the New York Times about local stock markets. Specifically, it was about the passage of Michigan's Investment Markets bill, a novel new law that allows the creation of intrastate stock markets that would let Michigan-based residents buy and sell shares of Michigan-based securities. The idea of a Michigan-only stock market harkens back to the local stock markets that once thrived across the country, and helped their regional economies thrive as well. The Detroit Stock Exchange (pictured left) raised money for fledgling automakers, for example, while the The Honolulu Stock Exchange capitalized Hawaii's banking, communications and power infrastructure in the early 1900s.

In a strange coincidence, just days before my op-ed ran, a Pennsylvania paper ran a story about LanX, a proposed local stock market for an eight-country region in western Pennsylvania. I wrote about LanX and its creator, Trexler Proffitt, then an assistant professor of business at Franklin & Marshall College, in my book (as well as well as in the New York Times Magazine in the weeks after the financial meltdown of 2008).

At Franklin & Marshall, Proffitt had done some of the only real research examining the role of local exchanges in American economic development. He and a fellow researcher counted 28 regional exchanges created between 1830 and 1930, from Richmond to Milwaukee to Los Angeles. The number of exchanges rose in lockstep with U.S. industrial production. But their research showed that regions with newly established exchanges had a 175% increase in manufacturing jobs—the dominant employer category at the time and a proxy for economic growth, That compared to 76% growth for the nation as a whole. So the local markets clearly helped their local economies.

Most of those markets have since merged or closed. Today, many promising regional growth companies can no longer access the public markets, which cater to very large corporations (the average IPO size is around $140 million, up from $10 million or so twenty years ago).

Proffitt believed that a Lancaster area stock market could help provide capital to small but growing companies in the Lancaster area and add as much as $10 annually to the local economy. It was also a way to forge connections. As he explained it: "The idea was to let investors see the social impact of the company they were supporting, a sort of “Buy Local” approach to investing."

The news out of Lancaster, however, was that Proffitt, now a professor at Emory University, was throwing in the towel on LanX. The reason? Crowdfunding had made the idea moot.

“Since the energy went in that direction, I thought this is too much of an uphill battle,” Proffitt told the paper.

The purpose of a stock market is twofold: to help companies to raise money through initial public offerings, and then to provide liquidity to share owners by providing a place to trade those shares.

As Proffitt notes, companies can now raise money through crowdfunding as well as other alternative capital-raising methods, such as direct public offerings. Today crowdfunding is limited to offering non-financial rewards to contributors, as Kickstarter does, or "equity" (including stock, debt or revenue-sharing) to wealthy individual investors. While we wait (and wait) for federal regulators to finalize the rules that will open up crowdfunding to the general public, more than a dozen states have adopted their own state crowdfunding rules.

Michigan is one of those states. It's Michigan Invests Locally Exemption, or MILE, allows Michigan-based ventures to raise money by selling securities to residents of the state through crowdfunding. Michigan lawmakers see it as a way to rev up their state economy and encourage a new generation of homegrown companies.

But for investors to really warm up to crowdfunding, they need to feel comfortable that they'll be able to sell their shares should they need to cash out. As Proffitt told me in an email recently, "All those equity shares have to go someplace and if there is no way to do that, investors are stuck. They may not care, because the limits keep their amounts small, but sometimes we all need our money back."
 
That's why Michigan followed up its crowfunding law with the Michigan Investment Markets law: to give Michigan investors the comfort of knowing they have liquidity. 

It will be interesting to see where this leads. Could crowdfunding platforms, in addition to raising money, also be a mechanism for secondary trading? If so, crowdfunding platforms could turn into a sort of stock market for local, small and mid-sized companies that don't have the wherewithal—or maybe the desire—to go public on the New York Stock Exchange or NASDAQ. The hope is that these new age stock markets, at least at the local level, might provide a platform for long term investment and a sense of place, rather than flipping shares to make a quick buck. 



15 comments:

phúc nguyễn said...

Cám ơn bạn bài viết hay quá !!
………………………………….
Hiện nay chúng tôi sắp mở bán dự án Căn hộ cao cấp Silver Star Nhà Bè, với giá cực rẻ chỉ 1ty2/căn 2PN, với đầy đủ tiện ích vượt trội: hồ bơi, trung tâm thương mại, siêu thị, rạp film Galaxy, hứa hẹn sẽ là nơi tốt nhất dành cho bạn. Chính nơi đây sẽ mang đến cho bạn những tiện ích mà không nơi nào mang lại được. Để biết thêm chi tiết xin liên hệ 0932.699.603 (Mr.Phúc) hoặc vào Xem thông tin Căn hộ Silver Star Nhà Bè tại website Căn hộ Silver Star Nhà Bè | Can ho Silver Star Nha Be

Khoi Danh said...

Khóa học SEO PRO giá rẻ uy tín tốt nhất TPHCM
Khóa học Facebook Marketing Online tốt nhất TPHCM
Cửa hàng mua bán chó becgie rẻ TPHCM
Dạy khóa học trang điểm chuyên nghiệp đẹp TPHCM
Dạy học hướng dẫn cách làm kem ăn ngon TPHCM
Khóa dạy học Chăm Sóc Da chuyên nghiệp tốt nhất TPHCM
Khóa học kinh doanh Spa hiệu quả thành công TPHCM
Khóa học búi bới tóc chuyên nghiệp ấn tượng tại TPHCM
Khóa học Thiết Kế Thời Trang chuyên nghiệp tốt nhất TPHCM
Khóa học Thiết Kế Nội Thất chuyên nghiệp và tốt nhất TPHCM
Khóa học Thiết Kế Website chuyên nghiệp tốt nhất TPHCM
Khóa học Thiết Kế Đồ Họa chuyên nghiệp tốt nhất TPHCM
Khóa học nấu ăn ngon uy tín chuyên nghiệp tốt nhất TPHCM
Mua bán chó Poodle uy tín rẻ tốt TPHCM Hà Nội Đà Nẵng
Mua bán chó Chow Chow uy tín rẻ TPHCM Hà Nội Đà Nẵng
Mua bán đàn Guitar TPHCM
Mua bán đàn Piano TPHCM
Mua bán đàn Organ TPHCM
Mua bán hải sản TPHCM

Khoi Danh said...

Mua bán chó Samoyed uy tín rẻ TPHCM Hà Nội Đà Nẵng
Khóa học tập Yoga đẹp uy tín giá rẻ tốt nhất TPHCM
Dịch vụ Xuất Nhập Khẩu uy tín chuyên nghiệp TPHCM Hà Nội
Khóa học Xuất Nhập Khẩu tốt nhất tại TPHCM Hà Nội
Dịch vụ Mang Thai Hộ
Dịch vụ Massage nam nữ tại tận nhà ở TPHCM Hà Nội
Chuyên Dịch vụ Giặt Thảm Văn Phòng Công nghiệp giá rẻ TPHCM
Dịch vụ vệ sinh Văn Phòng Công Nghiệp Nhà Xưởng TPHCM
Dịch vụ cho thuê xe ô tô chỗ tự lái giá rẻ uy tín TPHCM
Cần cho thuê xe ô tô ăn hỏi đám cưới rước dâu giá rẻ TPHCM
Cho thuê xe Innova, Kia Morning, Ford Everest giá rẻ TPHCM
mua bán chó Pug uy tín rẻ TPHCM Hà Nội Đà Nẵng
chụp ảnh cưới đẹp trọn gói chuyên nghiệp rẻ tại TPHCM
Khóa học chụp ảnh cưới đẹp quay phim chuyên nghiệp TPHCM
Nối tóc nam nữ ngắn dài đẹp rẻ uy tín tốt nhất TPHCM
Mua bán tóc nối đẹp tốt nhất giá rẻ tại TPHCM
Mua bán đàn Violin TPHCM
Công ty dịch vụ thám tử tư uy tín chuyên nghiệp tại TPHCM
Mua bán Dụng Cụ Nguyên liệu Pha Chế cafe đồ uống TPHCM Hà Nội

Khoi Danh said...

Khóa lớp học Đầu tư và Môi giới Bất Động Sản TPHCM Hà Nội
Công ty Cơ sở Xưởng chuyên nhận may gia công quần áo rẻ TPHCM
Khóa học pha chế đồ uống và cà phê tốt nhất tại TPHCM
Dịch vụ Sửa Nhà trọn gói đẹp nhanh gọn rẻ tại TPHCM
Khóa học Quản Lý Nhà Hàng Khách Sạn tốt nhất tại TPHCM
Học lái xe ô tô
Học tiếng Anh
Học tiếng Nhật
Học tiếng Đức
Học tiếng Pháp
Học môn toán
bí quyết hay
Bánh cupcake
Bánh donut
Bánh macaron
Quả óc chó
Dạy học pha chế
Thông tắc cống
Bao cao su
Dạy học tiếng anh văn người lớn tuổi TPHCM
Dạy học pha chế Bartender TPHCM
dạy học nghề làm nail vẽ móng tay TPHCM
Shoes Factory Manufacturer Supplier Company in Vietnam
Shoes Factory Manufacturer Supplier Company in China
Mua bán buôn giày dép nam nữ sỉ đẹp giá rẻ TPHCM
Cheap Indoor Soccer Shoes boy girl kid

Khoi Danh said...

Khóa dạy học Nối Mi chuyên nghiệp, đẹp và tốt nhất TPHCM
Khóa dạy học làm Nail vẽ móng tay đẹp chuyên nghiệp tốt nhất TPHCM
Khóa học hướng dẫn cách trang điểm chuyên nghiệp, đẹp và tốt nhất TPHCM
Khóa học búi bới tóc chuyên nghiệp và ấn tượng tại TPHCM
Khóa dạy học Chăm Sóc Da chuyên nghiệp tốt nhất TPHCM
Khóa dạy học Nối Mi chuyên nghiệp, đẹp và tốt nhất TPHCM
Khóa dạy học làm Nail vẽ móng tay đẹp chuyên nghiệp tốt nhất TPHCM
Mua bán Quả Óc Chó TPHCM Hà Nội
Mua bán hạt quả Hạnh Nhân TPHCM Hà Nội
Cửa hàng mua bán Két Sắt mới cũ mini rẻ tốt nhất TPHCM
Mua bán Cửa Cuốn mới cũ rẻ tốt nhất tại TPHCM Hà Nội

Thiên Hoàng said...

Thanks for share
Thiên Hoàng – Nhân viên Marketing
------------------------------------------------
Dịch vụ quay phim phóng sự cưới
Dich vu quay phim phong su cuoi

DirectPrivateOffers said...

Really impressed! Very informative blog.

Bun Duong said...

Thanks for share
Bun Duong– Nhân viên Marketing
------------------------------------------------
Mâm quả trầu cau trong ngày cưới và những điều cần biết
Mam qua trau cau trong ngay cuoi va nhung dieu can biet

My Vuong said...

Thanks for sharing
My Vuong– Nhân viên văn phòng
------------------------------------------------
Mâm quả ngày cưới miền nam và những điều thú vị
Mam qua ngay cuoi mien nam va nhung dieu thu vi

Tùng Thanh said...

Thanks for sharing
Tùng Thanh– Nhân viên Marketing
------------------------------------------------
Tại sao cần có mâm ngũ quả trong ngày cưới
Tai sao can co mam ngu qua trong ngay cuoi

Carly Barboz said...

Nice Information. crowdfunding marketing may also help in increasing the stocks

Mrs Sharon Sim said...

Hello Everybody,
My name is Mrs Sharon Sim. I live in Singapore and i am a happy woman today? and i told my self that any lender that rescue my family from our poor situation, i will refer any person that is looking for loan to him, he gave me happiness to me and my family, i was in need of a loan of S$250,000.00 to start my life all over as i am a single mother with 3 kids I met this honest and GOD fearing man loan lender that help me with a loan of S$250,000.00 SG. Dollar, he is a GOD fearing man, if you are in need of loan and you will pay back the loan please contact him tell him that is Mrs Sharon, that refer you to him. contact Dr Purva Pius,via email:(urgentloan22@gmail.com) Thank you.

Osman Mohammed said...


Do you need personal loan? Does your firm,company or industry need financial assistance? Do you need finance to start your business? Do you need finance to expand your business? We give out loan to interested individuals who are seeking loan with good faith. Are you seriously in need of an urgent loan contact us at Email:flourishloancredite@gmail.com
APPLICATION DETAILS
Your Full Details:
Full Name:
Loan Amount Need:
Loan Duration:
Phone Number:
Applied before?
State:
Monthly Income:
Country:
You are to send this to our Company Email;flourishloancredite@gmail.com

Flora said...

HOW I GOT A LOAN @ 2% INTEREST RATE with Victoriafinancier@outlook.com

Am very happy as am writing this testimony of how i got my loan from this loan, if you want to get a loan from any company you have to contact VICTORIA FINANCIER LOAN FIRM ( victoriafinancier@outlook.com ). when i contact her, i thought she was like the rest, and to my Greatest surprise i got my loan amount in my account and that was the Exact amount i applied for in her company. If you are interested in getting any type of loan, you should contact her no0w via email: victoriafinancier@outlook.com . She helped many persons that recommended to her.

Unknown said...

Great read thanks for sharing! Crowdfunding is another effective way to easily raise and donate funds and more people are benefiting from it everyday. Check out crowdfunding platforms like http://www.plumfund.com/ to learn more about its benefits.

Post a Comment