Imagine the potential of keeping your dollars local by investing in businesses you care about that are doing good right here in YYC. A new impact investment cooperative is doing just that. By providing everyday investors, like you and me, the opportunity to use RRSP and TFSA eligible shares, Local Investing YYC provides entrepreneurs with flexible terms to access capital to expand and grow their impact.
Why does local investing matter? More small businesses = more jobs
Every dollar that stays in the local economy creates a multiplier effect that creates jobs, grows our tax base and builds community prosperity for all. Canadian businesses with 10-20 employees are the most profitable across all businesses in Canada. In fact, most new job creation comes from businesses with 20 employees or less. As an entrepreneurial city, Calgary can grow jobs through investment in local business.
What is the current landscape for local investing?
For entrepreneurs, there is no shortage of demand for affordable capital in Alberta. The Calgary Chamber of Commerce notes that “the inaccessibility of early-stage capital investment is a major impediment to the growth and sustainability of Alberta’s small businesses. Often lacking the resources and administrative capacity to raise capital via debt financing, these businesses rely heavily on equity investments made by angel investors and venture capital firms.”
But currently, local investing in Alberta is costly and complicated and is generally limited to “accredited investors” as defined by securities regulations (e.g. individuals who have considerable assets and income). There is demand from locally-owned businesses to access affordable capital, and a supply of Albertans wanting to invest locally and with social impact.
Last year, Albertans invested more than $5 billion into RRSPs. However, investors lack choice in the market: the size and mission of companies listed in traditional mutual funds and other investment opportunities lacks diversity. For example, 77% of companies in the Toronto Stock Exchange are comprised of companies in the energy, mining or banking sector.
If Albertans moved merely 2% of their RRSPs to a local investment fund, the result would be ~$114 million in local investments.
What is Local Investing YYC?
Local Investing YYC is a community based response to the lack of local investment opportunities in Alberta. As a for profit investment cooperative, Local Investing YYC, removes barriers for entrepreneurs to receive funding, while creating local impact through member investments that are RRSP and TFSA eligible.
“Local Investing YYC offers a solution to investing outside of mainstream channels. I can see the direct impact of my investment in the community,” says Erin Poeta, founding member of Local Investing YYC.
The organization is currently reaching out to local entrepreneurs in need of capital to expand their business and grow their impact. Based on using cooperative principles, Local Investing YYC will work alongside entrepreneurs to determine their need for capital and eligibility for investment. After which, the group will be ready to sell investment shares in the cooperative providing a modest dividend to investors. The initial capital raise will be ~$500,000 investing in 1-2 local businesses.
In five years’ time, Poeta envisions Local Investing YYC having a portfolio of locally invested businesses each with their own tailored financing to suit their needs. Capital raises are routine, supported by a solid membership base. Local Investing YYC is part of a growing number of impact investments nationally, while potentially advising other cities how to start their own fund.
- Are you an entrepreneur in need of capital? Submit your request for funding to Local Investing YYC here.
- Are you interested in learning more about local investment in Alberta? Email firstname.lastname@example.org
- Join the Local Investing YYC team! Email email@example.com for current opportunities.