Community Capital Marketplace

A Community Capital Marketplace™ is a hybrid financial ecosystem based on collaborative rather than adversarial relationships among financial institutions, investors and businesses. This model provides:
• Investors with new opportunities
• Companies with new sources of capital and
• Financial institutions with a steady stream of qualified businesses with which
to build relationships and stay relevant.
Community Capital Marketplace ™:
The Hybrid Funding Model Empowered by the JOBS Act of 2012
The JOBS Act of 2012 created the conditions for a new, hybrid funding and investing model that provides opportunities for local businesses, individual investors and community financial institutions (banks and credit unions) to strengthen local economies. Dubbed "community capital," the concept leverages the social benefits of crowdfunding to take advantage of existing securities regulations. It provides a clear path to sustainable, economic growth through partnerships and engagement for investors with entrepreneurs/business owners and local financial institutions.
Broadly defined, crowdfunding is a method of raising capital designed to democratize the investment arena by broadening the base of individuals who can legally invest in virtually any business they choose.
community capital, based on financial and evolving societal realities, takes into account the changing roles of individuals and banks in the funding of local businesses. The ongoing success of crowdfunding across a broad range of industries has significant benefits for individual investors and small businesses. This is no small factor in the U.S. economy where small businesses generate some 65% of the net new jobs.
How it works
Congress, by the passing of the JOBS ACT in 2012, conceded that bank financing for small businesses would not be available in sufficient quantity to fuel the faltering U.S. economy. In the period 2000-10, community banks fell from 14,000 as a result of failures and consolidations, by February 2015. The Dodd-Frank Act, with its 14,000 new pages, also caused community banks to take a temporary "time-out" from financing local economies to regroup. Credit unions alone have not been able to replace community banks because a portion of them do not provide funding for commercial enterprises.
This situation has potentially dire consequences for the economy. Basically, small businesses possess the social capital to keep our communities thriving, but the community financial institutions, the traditional funders for this vital segment which includes 28 million companies, are reticent to loan.
From this combination of factors, the community capital model was born. The core premise was that by utilizing crowdfunding to shore up balance sheets of small businesses, the banks and credit unions would have a flow of viable potential business customers and be able to say "yes" to more commercial loan requests. Rather than exclude these funders from financial innovation, community capital allows them to take advantage of regulations by ultimately collaborating with small businesses and investors. The roots of the community capital model were born.
Community Capital Marketplace™ was created by the founder of Breakaway Funding, LLC, Kim Kaselionis, a well-respected, successful CEO/Chairman of a community bank serving the San Francisco Bay Area for nearly two decades. The purpose of Breakaway Funding, LLC is to introduce a new funding model that helps to solve a two-pronged problem she encounter during her tenure as CEO/Chairman: 1) lack of access to capital by SMB's and 2) community banks' struggle to lend. The Solution, she believes, is a fully integrated crowdfunding platform that would serve to match investors with entrepreneurs seeking growth capital to strengthen their balance sheets and positions those firms for further funding by community financials institutions - both industries she is intimately familiar with.
Businesses
One of the most significant barriers to businesses is equity capital. It is both very expensive and very difficult to find. Typically, small businesses draw capital from:
* Friends/Family - the starting point for many small businesses and entrepreneurs who reach out to friends and family, but there is a limited amount of capital derived by this source.
* Accredited Investors - represent 2-3% of the U.S. population, and many seek similar returns as venture capitalists. Because they tend to have built-in biases toward tech companies, accredited investors are not a reliable source for the majority of U.S. "meat and potato" companies.
* Venture Capital - while the most important source of risk capital, venture capital describes a capital investment vehicle where Limited Partners (LPs) commit money to venture capital funds managed by General Partners (GPs). In aggregate, US GPs put roughly $25 billion to work every year. That might sound like a lot of money, but it’s less than 0.2% of US GDP.
* Banks and non-bank financing firms - there are far fewer community banks than in previous decades, credit is tighter and many alternative financing methods are new or untested.
Individual investors
In the past, most potential investors were excluded. Today, private equity investing is being made available to everyone, courtesy of the JOBS Act, as well as individual state crowdfunding exemptions.
Because for many Americans the primary source for investment cash is in their retirement plan, the JOBS Act opens a new avenue to access the $17 trillion in cash sitting idle in retirement accounts. Now, PENSCO and other alternative investment custodians can facilitate ownership of private equity, including crowdfunding programs.
Community capital brings all of the constituents of the community (banks/credit unions investors and entrepreneurs) together to create a funding mechanism. Businesses provide the investment opportunity, investors provide the support and help to facilitate "skin in the game" and banks/credit unions to close the funding gap. To the extent that traditional financing is part of the funding model, it preserves the ownership position of the investors and the entrepreneur because the capital is non-dilutive.
Bank financing and crowdfunding
Another definition of crowdfunding is "large groups of people combining their economic power to support an organization, company or project they believe in."
The same definition describes banks and credit unions, which gather deposits (the economic power) from large groups of people (communities where they do business) to support companies, organizations or projects via their credit decisions.
Value
For startup businesses access to capital is crucial. Both the SBA and U.S. Bureau of Labor Statistics (USBLS) say that most businesses fail because they lack adequate capital and planning. Numbers don’t lie: 35 percent of all startups fail in the first two years and only 44 percent of all startups in business after four. Without funding, businesses cannot plan effectively. Crowdfunding a business to solidify a balance sheet that a bank would consider is a key component of survival.
Community Capital Marketplace™ model is dynamic reaction and is based on collaborative rather than adversarial relationships among banks, investors and businesses. It provides
* Investors with new opportunities,
* Companies with new sources of capital and
* Banks/credit unions with a steady stream of qualified businesses to build relationships with.
Community Capital Marketplace™ is registered with the United States Patent and Trademark Office as a pending trademark of Breakaway Funding, LLC. All rights reserved.

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