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Credit Unions and Crowdfunding: A New Trend?

Posted on August 10, 2017

A recent article in Credit Union Time chronicles an intriguing new partnership between a Massachusetts credit union and a New York City equity crowdfunding platform.

Author Roy Urrico tells how the program -- between New York City based GrowthFountain, an equity crowdfunding platform, and Marlborough, Mass.-based Digital Federal Credit Union -- enables entrepreneurs to raise capital and members to invest.

You can access the article at: http://www.cutimes.com/2017/03/17/crowdfunding-new-opportunity-for-start-ups-credit

Crowdfunding typically involves a large pool of people being recruited to fund a specific project or venture. Each investor contributes a relatively small amount of money, and stands to profit if the project is successful.

Basically, crowdfunding allows “little guys” to raise money for projects or start-up ventures using capital invested by other “little guys” – bypassing traditional funding sources like venture capital or private equity firms.

On the surface, at least, it would seem to be a natural fit for credit unions – allowing members to invest in local entrepreneurs without Wall Street or Big Bank involvement.

As Urrico explains the new program, “working with GrowthFountain, DCU receives a white-label platform built specifically for the Massachusetts credit union. There anyone in its community, as well as nationwide through GrowthFountain’s rebroadcast, can log in and see who is raising money and help that local business receive the funding it needs.”

If this works in Massachusetts, the idea could easily be applied to other CUs across the country.