Crowdfunding and credit unions are not terms usually associated together, but Vermont State Employees Credit Union is hoping to change that.
In an effort encourage small businesses and local entrepreneurship among its membership - as well as to generate more growth within the $680 million credit union - VSECU invested in a Vermont-based equity crowdfunding platform called Milk Money L3C earlier this year.
The investment was made through VSECU's wholly owned, independently operated subsidiary, Vermont Heritage Financial Group. The amount of the investment was not disclosed.
Vermont entrepreneurs and small business owners will soon be able to post fund-raising requests on www.MilkMoneyVT.com and receive investments from any state resident.
VSECU said Milk Money is currently working with a number of entrepreneurs to prepare and finalize the required offering documents needed to launch several campaigns and expects to announce its first investment partners "within the next month."
The second-largest credit union in the state, VSECU has about 60,000 members (nearly 10% of Vermont's population). Membership is open to anyone who lives or works in the Green Mountain State.
Founded in February 2015 by Janice Shade and Louisa Schibli, Milk Money aims to take advantage of the "invest local" opportunities offered by regulatory changes enacted in July 2014, which allowed Vermont businesses and start-up companies "to raise up to $2 million in capital by selling shares in their company to in-state investors."
The regulatory changes also enabled a simplified process to cut regulatory burdens and costs usually associated with securities registration.
More importantly, the so-called Vermont Small Business Offering allowed all residents of the state (at least 18 years of age) to invest in local entrepreneurs and small businesses.
Prior to the Vermont Small Business Offering, only accredited investors, with annual income of at least $200,000 and/or net worth over $1 million (excluding the value of their homes), could make such investments.
Though Vermont's economy is generally doing well (with an unemployment rate of only 3.3% in March 2016, down from a peak of 7% in June 2009), VSECU chief executive Robert Miller noticed that the low rate masked something that is also happening in other parts of the nation: many Vermont citizens are struggling and an aging workforce along with a declining population poses some serious challenges to the state's economic future.
Miller, a former Commissioner of the Vermont Department of Economic Development, also noted that there are not enough attractive jobs for young people across the state, and middle-class incomes are not keeping pace with total income growth.
"Underneath the surface, there is a disparity in economic growth in Vermont," Miller said. "Our membership are everyday Vermonters, and many of them are struggling."
The crowdfunding platform will largely be used to support existing small businesses instead of start-ups, according to Miller.
Schibli and Shade will continue as managing members of Milk Money, running its day-to-day operations, while VSECU members will benefit from the partnership through "increased access to investment and entrepreneurial educational programs," according to the credit union.
"With our large scale and reach across the state, we are in a very unique position to bring people together and empower the possibilities to help tackle some of Vermont's economic and social challenges," Miller said. "Fostering positive social and economic change enhances the communities in which our members live, creating a real impact on our members outside of our financial products, and that's our ultimate goal."
In March, VSECU also launched a program called Co-op Capital to make strategic equity investments in local cooperative organizations. The goal of Co-op Capital is to "drive significant growth within Vermont's cooperative economy and positively impact" VSECU's local communities, according to the credit union.
"By placing an emphasis on cooperative development, VSECU aims to grow a sustainable, locally-owned, and controlled sector of the economy," said Miller. "As a cooperative ourselves, one of our guiding principles is to support the cooperative community. But these investments are also designed to foster more vibrant local economies for our members and for all Vermonters."
The equity investments through Co-op Capital will help "fuel growth in the cooperative sector" the credit union added, while diversifying VSECU's existing investment portfolio.
But demographic trends in Vermont as well as across other parts of the New England region will likely continue to dampen hopes of economic growth in the years to come, say economic experts and insiders.
According to the US Census Bureau, Connecticut, Maine and Vermont were three of seven states that actually lost population last year, a trend that started in Vermont in 2012.
As a result, the state's elderly population has been inching upwards and local lawmakers are struggling to find ways to reverse these trends and guarantee a better economic future with younger workers.
Vermont Gov. Peter Shumlin has been attempting to attract more people to move into the state with a mix of college tuition reimbursement programs and down-payment assistance for homebuyers.
