Analysis of Community Capital Impacts

September 2021 - December 2021

Summary

Made possible by the 2012 JOBS Act, Community Capital fundraising has become an increasingly popular way for small regional businesses and fledgling startups to raise capital while providing investment opportunities to investors at all levels of income and sophistication. 

This report analyzes data from Honeycomb Credit, a major crowdfunding platform, to evaluate SEC regulations on crowdfunding, identify gaps in current reporting requirements, and recommend areas for further research. The team looked at comparisons between businesses within two major cities, Pittsburgh and Cleveland, due to the greatest data availability and more importantly the recent focus in each city on revitalization. 

Across both cities, more than 70 small businesses have successfully raised debt financing through Honeycomb.The team analyzed their finances against the demographic data of the business owners and the surrounding communities. They found that this specific platform provides women and minority business owners access to capital at a higher rate than traditional forms of capital such as bank loans and venture funding. 

Though this report established the relationship, its cause requires further research. How platforms like Honeycomb impact equity and access in the context of the broader capital markets is not well defined and the metrics to evaluate the relationship have not been established. To better understand these gaps and inform future regulatory changes we contend that standard data collection requirements need to be established across the industry to make longitudinal analysis possible.


 

 

Client

National Coalition for Community Capital