This article was first published by Go Green Directory / 2011-12 in association with Out There Monthly in Spokane, Washington:
I visited Seattle a few weeks ago. I try to make it over there at least once or twice a year to visit family, reconnect with old friends and visit former colleagues.
This time visiting I couldn't help but notice the abundance of new restaurants that have popped up all over the Pike/Pine Corridor--many in just the last six months. My architecture friends, most of whom spent the last decade designing homes for Seattle's burgeoning dot com crowd are now all designing restaurants.
All of this wouldn't seem so odd, except that we are presently in one of the worst economic downturns in U.S. history. I just opened a local business and the question I get asked over and over again is, "Why now? Why open a business in the midst of an economic recession? Are you crazy?"
Based on what I saw it seems that there are lots of crazy people in Seattle and they seem to be doing quite well. While I am not advocating for tons of new restaurants here in Spokane I am curious to understand what has created the sense of fearlessness towards opening a business that seems to have pervaded Seattle entrepreneurs. One potential reason might be access to capital, and not from banks but from an abundance of angel investors. From walking around Capitol Hill there appears to be lots of money that is being invested locally--potentially allowing Seattle to create jobs and boost their economy.
While it is hard to directly compare our demographics with Seattle's, most of us would agree that job creation is essential to our economic recovery. With greater density and affluence Seattle can support the plethora of art house eateries that are springing up all over town. Here in Spokane where our population is not quite so affluent we need good paying, entry level jobs--jobs that used to be commonplace--many of them in manufacturing.
According to Inc. Magazine, in just the past decade, nearly 54,000 factories in the United States have been closed or moved offshore. And, since 2001, we have seen a decline of 28 percent or about five million manufacturing jobs nationwide.
What I find most promising on the jobs front, is not just the hightech clean-tech industries that our Chamber of Commerce pursues, but those small business start-ups that are making a product, typically non-toxic, well-made or from waste materials. Businesses such as Sunshine Recycling, Maid Naturally, The Best Garden Tool (BGT), Mighty Mustard, and Dry Fly Distillery--are all relatively new local start-ups that are green businesses, precisely because they make something locally--and in a thoughtful manner. We need more of this kind of job creation and we need more support for it.
The biggest obstacle to starting a new business is access to capital. Thanks to the crash of 2008, it is nearly impossible for startups to qualify for enough money to get started--not to mention the collateral that is required. Locally there is a group starting to talk about this and how alternative sources for capital, such as crowd-funding or a local stock exchange, could help in making access to money possible for new small businesses.
Kim Pearlman-Gillman, of McKinstry Co., is excited about Kiva. org, a microfinance lending institution with partnerships around the globe to provide immediate loans to entrepreneurs in need. "What I love about Kiva is its simplicity. I can donate just $25 in my own name or as a gift and immediately I know that the money is being distributed."
While crowd-funding such as Kiva, IndieGoGo, and Kickstarter are starting to gain a foothold online, there are many loopholes (and lots of money) required to legally embark on this type of venture. Any company set up for the purpose of investing in other companies is regulated under the federal Investment Company Act of 1940. Complying with the Act can be expensive and according to the Cutting Edge Capital website, "probably not worth it for any but the largest funds like publicly traded mutual funds."
Another idea, worth revisiting is a local stock market. Spokane used to have a local stock market, which began in 1897 and closed in 1991. My mother invested in a Dick's Restaurant expansion in the late "80s, through this market. The Wall Street Journal recently wrote about the resurgence of local stock markets saying, "SEC rules give some wiggle room to local exchanges. Under U.S. securities laws, companies can avoid registering an offering with the SEC if the company is selling shares only to residents of the same U.S. state in which it is incorporated. The company also must do much of its business in that state."
While there appears to be many obstacles to creating a local investment fund for businesses, many of the SEC requirements are beginning be challenged at the state level, with California leading the charge. Washington may soon follow suit, with Cutting Edge Capital recently selecting us as a testing ground to lobby for some of these changes.
Investing in our local economy should be more than just buying local. It should include the opportunity for citizens to help build our local businesses and manufacturing. Empowering others to create and develop their own jobs, jobs for others, businesses that protect our environment and add to our local economy should be priority number one.
-- Go Green Directory Editor, Juliet Sinisterra.