3c hapter - Index of

102 Locavesting
offering. “In a community like ours,” says Frazier, “that’s usually if
not always the case.”
Frazier is comfortable with his interpretation of the SEC rules,
but concedes that it does entail risk. “We have not had a securities
lawyer charging $550 an hour go over the whole concept,” he
says. “While I think that our idea works well in principal, if there
is someone that doesn’t know someone else and there is an investment
made when they’re not really fully educated on what’s going
on, (the SEC) would have grounds to say that there was a violation
of the law. It’s something that we’re really careful about, to keep
it small and in the family of the community of people who know
each other.”
That’s one reason the group holds regular social events so
people can get to know each other. And they keep a low profi le,
just to be safe.
Game Plan for Locavestors
The Local Investment Opportunity Network (LION) is a group of investors
in Port Townsend, Washington, formed to promote local investment.
LION doesn’t invest as a group, but facilitates investment by
bringing together local investors with local businesses in need of
loans or equity. LION members are not necessarily accredited investors,
so companies rely on a private offering exemption for preexisting
relationships.
Pros:
The level of familiarity and knowledge that comes with a local investment
can provide investors with greater insight into the business.
Interest rates on loans generally refl ect the higher risk premium.
Dividends and repayment may also take the form of in- kind
payment—for example, cheese in the case of the Mt. Townsend
Creamery.
The rewards are more than fi nancial; by investing in local enterprises
you support your local economy and increase the local quality
of life.