3c hapter - Index of

222 Conclusion
small investments. The process of due diligence—the research
into the management, fi nances, and market positioning of a company—are
a large but necessary cost of any investment. Yet it
requires about the same amount of work to investigate a $50,000
investment as it does a $50 million investment, so the costs are disproportionately
high for smaller deals. That cuts into the potential
returns—one reason why Wall Street fi rms focus only on the
largest, most profi table deals.
There is also a behavioral issue. As investors, we are used to
investing our money the conventional way—in the stock market,
mutual funds, bond funds, and CDs. The idea of taking a fl ier on
a local business is alien to most of us.
One way to address these obstacles is through the creation
of funds that can make investments on behalf of individuals. The
funds could handle the legwork of identifying and vetting candidates,
allowing investors to diversify their holdings over a range of
companies in a particular geographic location. Initiatives such as
the National Cooperative Business Alliance’s co- op fund and the
Opportunity Finance Network’s CDFI fund—both being created
in partnership with the Calvert Foundation—are promising. But
we need more options like that.
In Brooklyn, for example, a creative army of young entrepreneurs
is producing artisanal goods—like Nunu chocolates,
Rick’s Picks pickles, Liddabit candy, Salvatore Bklyn Ricotta, and
Kombucha Brooklyn, to name just a few. There is also a new wave
of craft distillers, microbrewers, and even wine makers in the borough.
Many of these young entrepreneurs are growing quickly,
expanding from fl ea markets to major retail stores and restaurants.
(There’s even a new restaurant in Manhattan devoted to
Brooklyn- made products.) Why, I have wondered, couldn’t we
have a Brooklyn Artisanal Fund? That way the people who buy
and appreciate these products could support their producers on
another level and participate directly in their growth. Local funds
wouldn’t have to be limited to micro- enterprises; they could also
serve established small and midsized businesses in a region.
For now, there are few, if any, funds like this, at least that are
open to everyday, nonaccredited investors. Here again, economics