3c hapter - Index of

98 Locavesting
private electric company by creating the fi rst new public utility in
Washington in 40 years.
LION began humbly enough. When the local food co- op
wanted to move to a bigger space in 2000, a number of residents and
co- op members raised $490,000 in loans to fund the move. Then,
another opportunity would arise, and another group would come
together to raise funding and then disband. LION was created, as
one investor explains it, “to bring together the individuals that kept
bumping into each other trying to piece together these things in an
informal way, and to streamline the connection between potential
investors and lenders and opportunities.” For a couple of years, they
discussed what structure the group should take and began drawing
up agreements and other documents. By October 2008 they were
nearly ready to launch, when the fi nancial crisis gave them a shot of
urgency. “We just said, we need to get going on this right now and
step in as banks were pulling back,” recalls Frazier.
No Defaults, but Plenty of Cheese
The system is as simple and straightforward as you can get. Local
companies can fi ll out an application on LION’s web site. Then
they make a presentation in person to potential investors. LION
members don’t make investment decisions as a group. Rather,
investment opportunities are shared among the members, and
individuals are free to make their own deals—although quite
often several will invest together.
LION has grown from 8 charter members to about 20 today,
including retired techies, small business owners, and other professionals.
They are not poor, by any means, but neither are they necessarily
in the rarifi ed realm of accredited investors. When LION
was offi cially established, members had already informally made
well over a million dollars in local investments in about 15 companies.
Since then, group members have made another 8 to 10
investments totaling more than $500,000. While there are some
equity investments, most deals have been in the form of loans,
with interest rates averaging from about 5 percent to 7 percent.
To date, there have been no defaults.