3c hapter - Index of

Back to the Future 217
between investors and local companies, and to restore a sense of
purpose and trust to our markets.
The reincarnation of local stock markets presents some interesting
possibilities. For one, it offers a solution to the major drawback
of so many locavesting models: liquidity. If investors can cash
out of an investment when they need to, the proposition is much
more appealing. In fact, many see the DPO- plus- local exchange
model as the ultimate game changer for local investing.
At a time when many communities are promoting buy- local
campaigns, the exchanges could serve as a focal point for local
economic activity, as well as a branding tool for the region and
its unique local enterprises. (If Virginia is for Lovers, why can’t
Lancaster be for Investors?) Like the early regional exchanges,
they might refl ect a specialization—maybe biotech in Boston,
manufacturing in Detroit, or food and agriculture in Lancaster.
Most would likely seek a diverse range of small and midsized
companies based in the area that fall within the so- called funding
gap. Activity on the exchanges may be slow, and there won’t be
the kind of volatility that allows traders to make a quick killing—
but then, that’s exactly the point. 21
Despite a groundswell of interest in the topic, the local
exchange concept has a giant “proceed with caution” sign hanging
over it. The SEC is likely to take a keen interest, and any serious
attempts that gain traction would likely come under fi re from
the fi nancial industry. Even longtime advocates of local exchanges
are wary. “The worst thing that could happen is for someone to
rush out a local stock exchange without thinking it through, and
have investors get burned,” warns Don Shaffer, president & CEO
of RSF Social Finance. That would create a black eye that might
set back the local investing movement, he says.
And the technical and regulatory expertise required is daunting.
“There’s a lot of talk about creating community stock exchanges,
but does anyone understand how to do that?” asks Michael Van
Patten, a Wall Street veteran and founder of Mission Markets, an
online marketplace for investments with a social or environmental
impact that launched in 2010. (Workers Diners, for example, will be
traded on the Mission Market’s social capital market after its DPO.)