**Update 3/1/2016**

With crowd funding becoming more and more popular, it’s not surprising that local investment websites and organizations are gaining on their worldwide cousins Kickstarter and Indiegogo. While it’s great to support that reunion movie or buy a cool new gadget, there are many local businesses looking for investors. By investing locally, you are building a strong, solid foundation for your community to continue to grow. Small businesses are a great asset to any community. What’s even better is, that by investing locally, you can help these entrepreneurs achieve their goal of owning their own business.   If you’re not sure where to start your search for local businesses to invest in, check out Localstake .

Localstake maintains a list of businesses looking for investors. The business applies and goes through a rigorous vetting process before even being accepted onto the Localstake website. When you search localstake, you can be confident knowing the businesses listed are committed to growing your local community. Unlike traditional crowdfunding where you just get a single prize for your commitment, the local businesses featured in Localstake offer you an opportunity to see an actual return on your investment. If they do good, you (and the community) do good.

The type of companies you find on Localstake are as varied as the communities they represent. Some choices include food and beverages, retailers, restaurants, breweries, and franchises. The companies seeking local investors are already generating revenue or will as soon as funding comes through. Most are looking to buy new equipment, increase inventory, or expand their marketing reach. The minimum investment you can expect to make is between $250 to $500. If you want to invest locally but want to start small, this might be the perfect site for you.

The first step to finding a local business to invest in is to search the site. When you find a business you’re interested in, you can send them a message detailing the amount you’re interested in investing. Don’t worry if you change your mind – it’s non-binding so even if you say you want to invest a certain amount you can raise or lower the amount later. Next, the business will send you a proposal to review. You can negotiate terms and send a counter proposal if needed. If you like what the company is suggesting, you can sign the agreement outright.   The final step is investing. Since you’re a stakeholder in the local company, if they succeed, you succeed.

The only complaint about Localstake is the fees, but this only applies if you’re a business seeking local investors. The service is always free to investors. If you’re a business, though, you may want to look elsewhere. All funding earned is structured like a small business loan. Localstake charges $499 per month during your fundraising campaign and $199 a month after till you pay off your loan. This is considerably higher than other crowdfunding sites though, again, if you’re just looking to invest locally it’s a great option since there is never any fee for investors. Whatever you decide to do, you can’t go wrong by investing in local small businesses.

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While most of the country waits for the SEC to create rules to govern Equity Crowdfunding under the JOBS Act, LocalStake is helping small businesses raise the funds they need to grow through the Intrastate crowdfunding exemptions in Michigan, Wisconsin and Indiana.
Under the Intrastate crowdfunding exemption (enacted in around a dozen states as of the writing of this review: see here) companies have the ability to offer equity stakes in their companies as long as both the company and the investors reside within the borders of a given state.

LocalStake has done a masterful job of executing on the intrastate exemption in Michigan where they have helped Tecumseh Brewing Company to list and close the first ever Michigan intrastate crowdfunded offer. We are very impressed by the simplicity and effectiveness of the LocalStake.com crowdfunding platform. Our expectation is that Localstake will be even more successful rasing funds in their home state of Indiana (which enacted a crowdfunding exemption effective July 1, 2014).
The founders of LocalStake have also been successful raising funds through “Reg D” offerings using 506(c), allowing issuers the ability to solicit funds from accredited investors through crowdfunding platforms and other means of advertising. LocalStake has been on the forefront of 506(c) offerings, this major rule change under the JOBS Act was put in to effect in Oct. 2013 by the SEC.

Another interesting move by Localstake is its partnership with Zacks CF Research which offers issuers the ability to have their company valued by the largest independent research firm in the US. Zacks CF Research is a division of Zacks Investment Research (Zacks.com). They are currently the only crowdfunding platform to offer issuers and investors a third-party opinion of an issuers offering valuation.

Localstake has quickly become our top pick in equity crowdfunding. The clean and easy to use website allows potential investors to review offerings and invest in local businesses (accredited investors for 506(c) offers and state residents in intrastate crowdfunding offers).

Disclosure: We are currently working with Localstake, Zacks CF Research and Illinois Attorney Anthony Zeoli supporting an Illinois intrastate crowdfunding exemption. This review is also written by a contractor of Zacks CF Research and does business with Localstake issuers.

Our business relationships at Crowdfunding Website Reviews will never influence our ratings of crowdfunding platforms or crowdfunding services.

We strongly encourage our readers to visit Localstake, particularly residents of both Michigan and Indiana as intrastate equity offerings are being added to the Localstake platform on a weekly basis. Crowdfunding Website Reviews encourages potential investors to do their own due diligence and research on any potential investment.