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Fund Milwaukee has backed some of the city’s most iconic community projects, and a recent partnership will provide the organization with the means to support small businesses in a new way. Through pitch events, Fund Milwaukee connects the local investor ecosystem with Main Street businesses that need capital. The organization’s investor network has funded projects like Sherman Phoenix and Bublr Bikes and businesses like Purple Door Ice Cream and the National Bobblehead Hall of Fame and Museum.
Since 2012, Fund Milwaukee’s investor network has raised $3.9 million across 381 investors and completed eight equity deals totaling $2.8 million. The investor network has also produced 201 individual equity deals and 180 individual loan deals with an average loan size of $37,000. Earlier this month, Fund Milwaukee partnered with Honeycomb Credit, a Pittsburgh-based crowdfunding platform that allows small businesses to source capital.
BizTimes reporter Brandon Anderegg recently caught up with Fund Milwaukee board members Mike Maschek, Ben LeFort and Jeremy Fojut. The interview has been edited for length.
Who is involved in Fund Milwaukee and how does it work?
Maschek: “It can be anyone, and that’s what’s interesting about it. It’s set up as a friends-and-family (investment) model. It’s just Milwaukeeans who get together and are interested in supporting Main Street businesses. We’re providing a venue for businesses to pitch and for investors to hear pitches. The transaction is really between the investor and the business.”
LeFort: “Our mission all along has been to make investing more accessible to people who love Milwaukee and love the businesses they’re connecting with. We don’t endorse deals or endorse businesses; we’re just a platform for connecting. But in that process, it creates community and additional buzz and support for the businesses.”
What’s the advantage of Fund Milwaukee’s investment model?
Maschek: “Most people will invest in a 401(k) or fixed stocks, but it almost doesn’t seem real because you can’t really see it. With Fund Milwaukee investments, we’re generating returns. It’s not philanthropy, but you can also go down the street, visit the Sherman Phoenix and see what your dollars are doing. To me, that’s a lot more powerful than looking at a bank or investment statement and seeing a 5% return. You can see the dollars circulating in your community and the impact it has on the investors but also the businesses that are able to hire people. To me that’s the really powerful thing about Fund Milwaukee.”
Fojut: “Investing locally is all about equity. It’s part of a city’s culture, the urban fabric, and part of what makes you want to live in a city. It’s beyond the ROI, it’s ROC – return on community – and that’s really what I think it’s all about.”
LeFort: “The real advantage is having a community of investors that are supporting a local business. There’s often, especially for new investors coming to a pitch meeting, they get to hear the kinds of questions that other more experienced investors are asking of the business. There’s a lot of investor education that goes on naturally.”
What does the Honeycomb partnership mean for Fund Milwaukee?
Maschek: “They have a modern platform and the ability to provide infrastructure for businesses to receive funds and pay out funds to investors. It’s a way for Fund Milwaukee to bring that sort of platform to Main Street businesses in Milwaukee. The Honeycomb model provides us the ability to scale the friends-and-family model in a way that would be more challenging to do without it.”
Fojut: “I think it’s about the capital stack too. You get $37,000 on average here but you need $100,000 to hit your fundraising goal. (Honeycomb) is another tool in your toolbox to get to your goal.”
What role could Fund Milwaukee play in small business growth as we exit the COVID-19 pandemic?
Maschek: “We’re doing a lot, but there’s so much more potential for this model. It’s about getting this concept in front of people and when you do it, people are interested. How do we touch more people with this idea?”
Fojut: “This can be that first steppingstone for people. We need to scale the amount of awareness of Fund Milwaukee and the amount of investors in it. I think that would be the future goal, continue to grow this and know it’s a place to start and that you can make it here.”
LeFort: “What a way to build more Milwaukee icons. We can do this together. It’s a vision that I think younger generations are into, they get it, they love local businesses, and this is a way to keep money, jobs, investments and interest payments local and build up the whole ecosystem.”