“Localstake is providing a funding platform in several states now and just closed the first-ever intrastate crowdfunded issue in Michigan. We believe this partnership improves Localstake’s already strong position in intrastate crowdfunded securities by providing its investors with independent reviews of the company seeking capital,” said Howard Orloff, vice president at Zacks CF Research.
Intrastate crowdfunding is legal in just a few states now, but the trend is growing. By keeping the issuers and investors within state borders, each of the 50 states can avoid federal regulation by utilizing the intrastate exemption. The exemption allows companies to raise capital without a federal filing with the SEC. Michigan approved intrastate crowdfunding in December 2013.
“We believe that the investment landscape is changing. People want to invest local. They want to help out the local economy. They want to create jobs.” Localstake co-founder Kevin Hitchen told Michigan public radio. He said that independent reviews of the companies raising funding on Localstake is something that Localstake has been looking for since it began.
“When we take on a crowdfunding issue, each company will have the option of having Zacks review the company, the business plan, and the financials. That’s information investors want to see. In this sense, due diligence can begin with a Zacks CF valuation review,” Mr. Hitchen says.
A Zacks valuation and ratings report is done by an analyst with business experience in the industry of the company being reviewed. The analyst has no connections to the company being examined. Zacks reports will be listed on the Localstake website for registered clients to download, read and discuss with the crowd.
“Our investors want to know as much as they can about the company seeking to raise capital. That’s why we partnered with Zacks CF Research. Zacks has an international reputation for quality, accuracy and honesty. By bringing that to the table, we are raising the profile of our crowdfunding service and enhancing our investors’ confidence in the information provided,” Mr. Hitchen said.
Mr. Orloff said Zacks CF Research is very interested in intrastate crowdfunding as well. When the opportunity to partner with Localstake came up, it was the opportunity to partner with the leader in the space.
“Intrastate crowdfunding is just going to grow. Zacks CF Research supports this investing model and we look forward to assisting companies and investors in all 50 states when those state legislatures approve intrastate crowdfunding regulations,” Mr. Orloff said. “Congratulations to Localstake for being the first in Michigan.”