Here are some frequently asked questions about the Co-op, and our answers. If you have questions that we should add to this page, please send them to CoastInvestmentCoop<at>gmail.com.
Q1. What are the strategic priorities of the Co-op?
A1. The strategic properties of the Co-op are set by the board of directors of the Co-op. The BOD has determined the strategic priorities of the Co-op will be:
Q2. What is the difference between equity and debt financing?
A2. With a loan, an investor gives an investee funding in exchange for a promise, secured by collateral, to repay the loan at a specified rate of interest over a specified period of time.
With equity financing, the investor is buying an ownership share in the venture. (If you buy shares on the stock exchange, you are buying an ownership share in the company.) That share may gain value if the value of the overall venture increases. The investee still promises to repay the capital under agreed upon conditions, but equity shares do not require monthly payments (although they may earn dividends). Equity is generally more ‘patient’ than loans, since owners can be expected to have a long term commitment to the success of the venture.
Q3. How will my investment in the co-op improve my community?
A3. Your membership share value is deposited into the Co-op. The co-op then invests this pool of funds into appropriate community based projects which offer a high immediate social return on investment, and a long term return on financial investment.
The Sunshine Coast is full of talented committed citizens with ideas of how to improve the Sunshine Coast. For many of these projects to be successful they require financing. Ventures that have a community mandate—an emphasis on filling a local need or solving a problem ahead of making money—may have difficulty getting conventional financing. They may also take some time to build their financial return.
CCIC is designed to provide the type of financing called “patient capital” which eligible community based projects need to successfully launch.
Q4. Why is the Co-op offering equity financing instead of debt financing?
A4. Several reasons. First, debt financing is already available through Community Futures, and the traditional banking sector. Community Futures, in particular, is willing to extend “character loans”, based more on a person’s track record and reputation in the community than their assets.
Equity financing is more difficult to source, and can help businesses that need several years to build a cash flow. For some businesses it is also important to have a trusted investor whose motives in investing are rooted in community values.
Q5. What are some examples of projects which the Co-op might invest in?
Q5. Micro businesses employing stay at home parents, new models to create affordable housing for retirees, local food production and processing facilities to increase our food security, innovative business ideas providing environmental benefits, e.g. recycling, composting or re-purposing of materials.
Q6. What is Community Futures?
Q6. Community Futures is a federally-funded organization that promotes rural economic development across Canada. There are 34 Community Futures offices in BC. The Sunshine Coast office has been providing loans, training, and advisory services for small businesses and entrepreneurs in our community for over 20 years.
Q7. What is Rhiza Capital?
A7. Rhiza Capital is a joint initiative between Community Futures Sunshine Coast, the Sunshine Coast Credit Union and Powell River Community Investment Corporation (PRCIC) who are collaborating to address the need for local equity-based investment. Rhiza raises local capital for investment in ventures that will add economic, social and environmental value to our communities.
Rhiza manages three portfolios.
Rhiza’s Venture Capital, aimed at investors with $50,000-$100,000, invests in BC companies that are eligible for investors to receive a 30% fully refundable tax credit. This is a relatively high risk, potentially high return fund, with an emphasis on the tech sector.
Rhiza’s Community Investment Fund, for investors with $10,000-$25,000, invests in local businesses. The goal of this fund is a regular return of 3-8%.
The Coast Community Investment Co-op is managed by Rhiza, but it is also a stand-alone organization, incorporated as a co-op in BC. It is owned by its members and its mandate is high community impact, low return.
Q8. What is the relationship between Community Futures and the Co-op?
A8. Community Futures holds controlling shares in Rhiza and supplies operational resources like staff. However, the Coast Community Investment Co-op is owned by its members. Without the support of Community Futures in providing operational support, due diligence, and legal paperwork, the Co-op would not be possible.
Q9. Community Futures (CF) already supplies debt financing to the Sunshine Coast. Why not equity?
A8. Rhiza enables CF to work on projects across larger scales, sectors, and impacts than CF could alone. The additional expertise, resources, and experience that each partner brings to Rhiza is significant. We are stronger together than we could ever be alone.
Q10. Why is it important to have a source of local investment money?
A10. When we increase the variety of financing offered on the Sunshine Coast, we increase the likelihood that a businesses can find the type of financing they need to start, expand, or purchase a business in the region. The Co-op is especially important because it provides a source of financing for projects which begin to improve the social or environment of the Sunshine Coast quickly, but will be slow to show a financial return.