Empowering Communities: Community Investment Solutions

Community-based businesses, such as co-operatives, consistently rank access to capital as one of their most significant challenges. Welcome to Community Investment Solutions (CIS), a groundbreaking initiative dedicated to empowering communities by fostering sustainable and resilient local economies through increased access to capital for community-based businesses. The CIS project is a collaborative endeavour led by the Alberta Community and Co-operative Association (ACCA), generously supported by the Government of Canada, Peavey Industries, Co-operators, Servus Credit Union, and Vancity.

Our Goal: Facilitating Capital Flow to Community-Based Businesses

To achieve this goal, we are dedicated to developing services that address obstacles hindering the flow of capital from investors to community-based businesses. In our analysis, these obstacles exist on both the demand and supply sides.

Our Strategy: Overcoming Capital Flow Obstacles

Obstacles on the Demand Side

Determining and implementing the optimal capital structure for your community-based business through financial instruments requires specialized knowledge across various fields, including finance, law, regulation, tax, marketing, technology, and administration. Most businesses lack these skills because structuring and offering financial instruments are sporadic tasks not central to their core business. While community-based businesses can engage specialized service providers in these fields, selecting and managing these providers for a successful capital raise also demands expertise and time. What is needed is an integrated service.

Such integrated services exist in the private sector, where investment banks assist large companies in optimizing their capital structure and issuing securities. However, no integrated service provider exists for community-based businesses in Western Canada and beyond. Consequently, many community-based businesses miss out on capital-raising opportunities, leading to capital-constrained businesses needing help to reach their full potential.

The CIS project aims to bridge this market gap by developing an integrated investment banking service for community-based businesses.

Obstacles on the Supply Side

Even if community-based businesses successfully address their demand for capital through financial instruments, there remain significant obstacles on the supply side for accessing capital. Regulatory changes have constrained banks and credit unions to provide low-risk capital to large businesses. The provision of higher-risk capital increasingly falls within the domain of investment managers. However, driven by economies of scale, these managers focus on large-scale, global investment opportunities rather than smaller, local ones. While community-based businesses can attempt to raise capital directly from investors, this process is complex and time-consuming, which is why financial intermediaries such as banks and investment managers exist.

Investment co-operatives, also known as opportunity development co-operatives, have begun to fill this gap in recent years but need help to become viable investment managers.

Investment co-ops often need to be bigger to generate the economies of scale necessary to offer investment products that meet investor needs in terms of cost and risk.
Investment share classes in co-operatives have inherent drawbacks as investment products, as co-operatives are tax-inefficient investment vehicles, and investors and their advisors are less familiar with them.
Most investment co-operatives need to effectively segregate assets and liabilities between investors and the investment manager or among investors in different share classes, which increases risks for investors.

The CIS project aims to tackle these challenges by developing a professionally managed, scalable, full-service investment management platform that investment co-operatives can leverage. In this model, investment co-operatives would continue to focus on raising capital within their community and identifying local investment opportunities using investment vehicles structured and managed by CIS. By partnering in this way, investment co-operatives can reap the benefits of scale, including higher returns, lower costs, and reduced risk.

Is CIS the Right Partner for You?

If your community-based organization is preparing to raise capital for a business or invest in a portfolio of local businesses, we eagerly anticipate hearing from you. Together, we're not just investing; we're investing in the future of our communities.

Contact Information:

Mario Cimet
Client Relations Manager
Email: Community Investment Solutions
Phone: +1 (778) 228-5537