Enhancing Rural Access to Capital Through Development of a Local Crowdfunding Incubator

Strong, sustainable rural communities are essential to creating an economy "built to last that rewards hard work and responsibility."1 These communities supply our food, fiber, and energy, safeguard our natural resources, and are essential in the development of science and innovation. What do communities need to stay economically healthy in order to provide these goods and services? According to a Kauffman Foundation Study, they need a vibrant entrepreneurial culture. Net job growth occurs in the U.S. economy only through startup firms.2Supporting entrepreneurship in rural communities requires finding ways to enable better access to capital, particularly early stage and equity capital and non-traditional (non-bank), sources of financing. A report issued by the Federal Reserve Bank says, accessing equity capital may be the most important hurdle hindering rural entrepreneurship. The Local Crowd, LLC has created a crowdfunding platform and incubator that can overcome that hurdle by bringing together the essential ingredients for alternative capital formation and entrepreneurial growth in rural communities. The TLC model enables businesses and organizations to raise funds online with a robust educational system to help them do it right. TLC also provides strong support to communities, enabling them to effectively launch the locally-branded platform, and create an ecosystem of local investment.Phase I research proved the feasibility of The Local Crowd incubator by piloting it in two Wyoming communities. The Phase II research project, "Enhancing Rural Access to Capital Through Development of a Local Crowdfunding Incubator," will validate the effectiveness of our crowdfunding model by field-testing it in up to 30 rural communities around the United States. The research plan includes three technical objectives: 1. Demonstrate the effective design and functionality of the TLC 2.0 crowdfunding software through development of the software interface, and educational software, 2. Validate the effective implementation of The Local Crowd crowdfunding model through field-testing in rural communities, and 3. Demonstrate the positive impact of The Local Crowd crowdfunding model on the socio-economic vitality of rural communities.Anticipated Results and Potential Commercial ApplicationsThe Local Crowd, LLC has designed an innovative crowdfunding tool that rural communities can use to break down the barriers to capital access for their residents. The crowdfunding industry is growing and dynamic, with the global crowdfunding economy growing to over $5.1B in 2013. By 2025, the global crowdfunding market could reach more than 1.8 times the global venture capital industry today.3The potential post applications for TLC can be expanded far beyond its core target market, which are rural communities across the United States. Its innovative emphasis on community host training and education, and focus on the grassroots support of its community residents will enable its rapid growth among rural communities across the U.S., and strong potential for expansion to rural communities in other countries. TLC's platform offers a unique local-based perspective. We expect our unique features will differentiate TLC from other crowdfunding platforms long into the future. The innovation inherent in our technology is that it is a model that is "hardwired" into rural communities and focused on rural needs. It is intended as a turnkey solution, providing everything a rural community needs to immediately start a local crowdfunding program and incubate a successful crowdfunding culture.1www.whitehouse.gov, (2012). Strengthening Rural Communities: Lessons from a Growing Farm Economy. Council of Economic Advisers, the White House Rural Council, and the U.S. Department of Agriculture, www.whitehouse.gov/sites/default/files/docs/rural_communities_06_11_2012.pdf2Kane, T., 2010, "The Importance of Startups in Job Creation and Job Destruction," Ewing Marion Kauffman Foundatio