LanX is a South Central Pennsylvania prototype of a local securities offering and trading platform aimed at channeling growth capital to local small and medium size enterprises (SMEs), particularly those that are committed to sustainability and job creation in their local communities. To create jobs and sustainable local economies, local capital markets can be used because they operate similarly to a utility or social purpose business.
Local communities are at a competitive disadvantage compared to larger firms that can access national capital markets. However, U.S. job creation is mostly done by small and medium businesses in local communities, making them extremely important. People trust local firms with a positive track record, but it is much easier to invest in big multinational companies headquartered abroad, thus hindering local firms’ strategic projects. LanX differs in circulation from other securities market solutions in that they believe that people will trust investing at the local level instead of social stock markets or crowfunding. The work of the local securities market staff will be focused on working closely with the most promising local firms on a case-by-case basis to encourage outreach within a 10-country region to develop motivated and expanding businesses who fit rigorous listing criteria.
The goal LanX and investing local (Locavesting) is to see 50 local capital markets in the U.S. and Canada within five years of the first anniversary of the first properly structured local market pilot. They also hope to see a reallocation of 1% of the investors’ total investments on national securities exchanges moved to investments in promising local businesses. This would cause the money to circulate in numerous local economies, supporting SMEs, and solidifying a strong core of job creation in the economy. Locavesting should be as simple as investing in national stock markets, but this change will depend on the creation of reliable social-purpose institutions to protect the investing public and ensure that only the most high-integrity businesses get funded. Local securities markets can facilitate both the creation of jobs and lead to a more sustainable local economy.