A Funding Match Made in Heaven

Equity crowdfunding, a method of raising capital from small-dollar investors implemented by Title III of the Jumpstart Our Business Startups (JOBS) Act, came online nearly a year ago. The measure was touted as an alternative way to finance both early-stage and local companies that might have trouble securing a loan or attracting more conventional investors. By its nature, equity crowdfunding is a horizontal endeavor; companies soliciting small investments register with the SEC through an intermediary platform and begin to build capital toward their goal. If they reach that goal, they receive the funding and the investors officially become shareholders. One intermediary platform, GrowthFountain, saw an opportunity to merge the concept of equity crowdfunding with another kind of horizontal institution: the credit union. Credit unions are financial institutions similar to banks, except for one major difference: Credit unions are not for-profit entities, but rather cooperatives. Each account holder in a credit union is a part owner that retains a democratic stake in the institution and receives dividends in the form of more favorable interest rates, whether it’s on deposits or loans. Marrying equity crowdfunding with credit unions was a no-brainer, said Ken Staut, CEO of GrowthFountain.

“When we formed GrowthFountain and thought about crowdfunding, a lightbulb kind of went off over my head,” Staut told Business News Daily. “Our mission has so many similarities with a credit union’s. We’re both focused on people helping people and community development.” The intersection of equity crowdfunding and credit unions After Staut realized equity crowdfunding and credit unions should go together, he reached out to Callahan & Associates, a prominent credit union think tank, to gauge some of the unions’ interest in offering access to GrowthFountain’s equity crowdfunding platform. It turned out interest was immense, Staut said. Although the company is still early in the process, it already has three credit union partners: Digital Credit Union, a top 10 credit union with 620,000 members across 50 states; Massachusetts-based Jeanne D’Arc Credit Union with 85,000 members; and Oregon-based Rivermark Community Credit Union, also with 85,000 members. About a dozen more contracts are in the works, and Staut estimates that when the ink is dry, GrowthFountain’s equity crowdfunding platform will be available to roughly 3 million credit union members nationwide. Each credit union leverages GrowthFountain’s platform, but the branding and imagery is all unique to the credit union that’s offering it to members. The foremost businesses displayed on each site are unique to the geographic region in which the credit union operates as well, meaning members can invest in local companies – maybe even ones they visit and patronize.