Reconsider and Revalue: Fostering Community Impact Through “Locavesting”
The biggest news in the investment world right now is perhaps Twitter’s stunningly successful initial public stock offering last Thursday, which left the company valued at approximately $24 billion. Some pundits, however, see Twitter’s IPO as another indication that we’re poised at the edge of a tech bubble similar to the one that decimated Silicon Valley in the late 1990s, when investors threw boatloads of cash at companies with unsustainable business models.
Though a widely used social media site like Twitter isn’t exactly Pets.com, there are some investors that, for reasons of an impending bubble or otherwise, are rejecting the current high-growth tech paradigm. Instead, they’re focused on “locavesting,” or the grassroots creation of a sustainable new economy through impact investing in local and social enterprises. Angela Barbash of Ypsilanti-based sister companies Reconsider and Revalue is one of them.
Barbash says there is a lot of research that supports the idea that the true backbone of the American economy is small businesses, not companies like Twitter and Facebook. Despite that research, investors continue to favor big, high-growth tech companies over mom and pop retail operations. “Economic development agencies haven’t quite gotten that [research] yet,” she notes.
Barbash is a financial advisor who worked at Edward Jones for five years. In 2008, she says, she saw the writing on the wall. “Clients didn’t want to be tied up in global investing,” she explains. “There was no integration between local investing and global investing.”
In 2011, she went to a Slow Money conference in San Francisco. Although there were lots of financial professionals there, she couldn’t find a single one that was aware of a local mutual fund. One person told her there would be no local mutual funds until someone found a way to make money off them.
It was with that conversation in mind that Barbash and her partners launched Reconsider and Revalue in June. Reconsider, for its part, works with small businesses and gets them certified to be investment-ready by reviewing their business plans and financial projections. It also offers contract CFO and COO services to social enterprises.
Reconsider looks at capital not only in financial terms, but in human and spiritual terms, she says. It goes beyond pure profit to consider what other benefits a company provides its community. Because of that analysis, Reconsider says it is painting a much more in-depth picture of a company’s worth to investors.
According to Barbash, a big part of Reconsider’s mission is to educate local and state economic development offices, as well as faith-based organizations, about the importance of community impact investing. This summer, Reconsider partnered with the Washtenaw County Office of Community and Economic Development to release a report assessing community capital strategies and suggesting more impactful ways to deploy municipal investment dollars.
This is where Reconsider’s sister company, Revalue, comes in. Revalue is registered firm that is dedicated to “fostering deep connections between clients, their community, and their resources.”
Barbash says that Revalue charges 1 percent per year to manage between $250,000 and $1 million of an investor’s capital. It currently has $1.2 million in assets under management and hopes eventually to grow that amount to $100 million so that it can seed its own investment fund.
However, Barbash admits that, so far, it’s been a challenge to convince municipalities to abandon the old paradigm for community impact investing. “We have found over the past six months, as we’re really making an effort to reach out to progressive communities or investors, that while one or two people [within the entity] may get it, they don’t have the support of the rest of the decision makers,” Barbash says. “It’s an uphill battle. We’re fortunate that the Washtenaw County board was pretty progressive.”
As Reconsider and Revalue do outreach work around the state, there is hope for locavesting on the horizon. House Bill 4996, introduced by State Rep. Nancy Jenkins (R-Adrian), would create an exemption to existing securities regulations that would effectively enact the equity crowdfunding provisions of the April 2012 JOBS Act.
HB 4996, which passed 108-0 in the House last week, would, under certain circumstances, allow companies to raise capital through online crowdfunding platforms. Under current regulations, businesses who use a site like Kickstarter are technically asking for donations in exchange for gifts or other rewards. If HB 4996 is passed in the Senate, Michigan will be the third state nationally to allow businesses to trade equity in their company in exchange for crowdfunding investment.
Barbash went to Lansing to testify on behalf of the bill, which also essentially allows individuals to make equity investments the same way investment firms would. “Consumers are becoming more aware of the impact that they can have both with their buying decisions and the decisions they make about their investment dollars,” she says.
Reconsider also recently announced it will be the “media partner” to Indianapolis-based Localstake, an online investment website that doesn’t need a change in regulations to operate. Localstake is an online marketplace connecting companies raising $1 million or less with individual investors. Investors can register on the site to look at the various companies raising money and request due diligence documents.
Barbash, who calls Localstake “an awesome platform,” says it was looking to expand to Illinois or Kentucky, but Reconsider made the case for that expansion to happen instead in Michigan—and was successful. A kick-off reception will be held from 5 p.m. to 7 p.m. on Dec. 4 at Ann Arbor SPARK East to celebrate the announcement.
So while Barbash and the rest of the Reconsider team clearly have some work to do, she says she’s optimistic that locavesting will catch on in Michigan. “We’re trying to get the word out to investors,” she adds. “We’re really the only firm in Michigan that’s independent and passionate about community impact investing.”