Sei sulla pagina 1di 3

Credit Unions and Crowdfunding

The SECs adoption of final rules regarding regulation

crowdfunding signals that credit unions now have an
opportunity to connect members with entrepreneurs who
seek early stage capital. Credit unions can now help
investors and businesses find each other.
As a concept, the idea of funding a small business through
small, local investors is nothing new to credit unions. In fact,
it could be argued that in a broad sense a credit union is the
original crowdfunding business model.
Here are some reasons why some credit unions should be
interested in this market:
Crowdfunding platforms can help credit unions execute
on their goal of helping small businesses in their
Crowdfunding will get the attention of younger
customers. Young people are already familiar with the
crowdfunding models such as Kickstarter and If their local credit union is
sympathetic to the idea, younger members and
younger prospective members will take note.
Crowdfunding fits the credit union brand. Credit unions
are member-owned. Similarly, small businesses using
crowdfunding will create dozens of individual
shareholders with a stake in the business.
Crowdfunding will build on and support a credit union's
community-based, member-driven brand.
How could this work?
The credit union could put a link on a website where
members see a list of businesses looking for capital. The list
would be sortable by location, funding level, industry sector,
and the owners business histories. If members are
interested in investing in a company, they could arrange to

transfer money directly from their accounts into an escrow

Businesses would have to meet stipulated capital-raising
objectives before deal could close. If an entrepreneur wants
to raise, say, $50,000 in 3 months, and only $25,000 comes
in, for example, everyone gets their money back. The deal
ends of its own accord. The credit union does not hold stakes
in the companies; it simply introduces the parties.
How would the credit union make money?
Companies could pay a one-time setup fee of $5,000 or
$7,500, plus a 3% origination fee, for instance. For deals that
fund, the credit union could receive, say, 10% of the
origination fee. Even if crowdfunding is not very profitable, it
could create valuable reputational capital.
Judging by recent industry reports, though, it could be
profitable. Crowdfunding is growing rapidly around the world,
raising $16.2 billion in 2014. That is a 167% increase over
2013, when $6.1 billion was raised, according to, which expects investments to double in
2015 to $34.4 billion.
Title III of the JOBS Act lifted an 80-year rule prohibiting early
stage capital from mainstream investors. Until now, early
stage investments were deemed too risky for anyone other
than high net-worth investors.
For more information, connect with Douglas Slain @
Crowdfunding platforms: