Roll your memory back to late 2011. Occupy Wall Street dominated international headlines, and in Oregon, Occupy Portland protesters crowded the downtown blocks that then-business analyst Jim Conachan crossed daily to reach his office.
“Everyone was upset,” says Conachan’s business partner and wife, Kathy Russo, “and we decided that instead of complaining about big business, we’d get people to band together to support local business instead.”
A year later, and backed by local investors, Conachan and Russo hired 25 local residents, boosted the bottom lines of a list of local businesses, and launched Streetcar Bistro and Taproom as a locally owned, locally supported, locally involved corner pub.
Betting on community support
“We needed $100,000 to supplement our self-funding,” Conachan says. “The SBA and banks turned us down,” Russo adds, “because we were starting not just a restaurant, but a first-time restaurant. We had business acumen, but no experience in the restaurant arena. We were in a panic. And then Jim came up with this idea to invite people to invest in a hometown business that rewarded them with benefits and discounts, like a wine club, but taken to a new level.”
Creating a financial and social investment opportunity
Investors put in as little as $200 or as much as $5,000. “We wanted to attract people who may never have considered investing, and who didn’t need to be wealthy, to help start a business, a sustainable business, in a place they would feel comfortable,” Russo says.
“They understood the difference between a purely financial investment and a social investment, and they saw that our program offered both. It was a spin on an idea we hadn’t even read about,” she says, referring to the book “Locavesting,” by Amy Cortese, who now points to Streetcar Bistro and Taproom as an example.
Making it mutually beneficial
“This wasn’t crowdfunding. It wasn’t benefits and discounts. We found a way to make it mutually beneficial,” Conachan says. “We added a sliding-scale percentage of return to every investment amount, and we repaid investments through discounts that slowed the return process to a manageable trickle. It was good for us and for our investors.”
Those investing $200 received a 5 percent return and a 5 percent discount, with percentages climbing to 25 percent at the top-tier angel investor level. A $200 investor immediately received an account balance of $210, to be repaid through 5 percent discounts on food and beverage purchases.
Those investing $500, $1,000 or $2,500 received stepped-up benefits, with angel investors netting $6,250 from $5,000 investments, repaid through 25 percent food and beverage discounts and supplemented by Founding Member recognition, priority invitations to craft beer- and wine-tasting events, lifetime cover-charge waivers, a private catered event, and a 10 percent discount on off-premises beer and wine purchases once the investment account balance was exhausted.
Thriving on a hands-up approach
“Our goal was to turn the tide of negative news by building up our community,” Russo says, “starting with our bistro and its 25 employees,” which now include her twins and 16-year-old son.
“Everything in this business comes from and gives back to the community,” she says, explaining that the bistro’s furniture was custom-made by a Portlander who salvaged juniper trees and launched a woodworking business as a result. Similarly, the man who cleans the bar’s 30 taps has leveraged his experience into a business maintaining equipment at other local bars.
Keeping the cycle going
“We have investors who eat or drink here several times a week, bringing others who might otherwise not know about us,” Russo says. Some become participants in the Founding Member program, which is still open and attracting investors, including one angel who bought in but declined the discounts, preferring instead to simply be part of the effort.
The key to success, both owners agree, is to present the investment opportunity personally. The one mistake they recall was spending $1,500 to send fliers announcing the program. “Our windows were papered over during construction, and people mistook the mailer as a desperation effort,” Conachan says. “It taught us a lesson we’ve applied to our marketing, introducing ourselves only through face-to-face events that let people know we’re here not just to serve food and drinks. We’re here to be part of the community.”
On her blog, Amy Cortese defines “locavesting” as a local movement that involves investing on Main Street to earn profits that support the local community. By attracting community investors, dealing with local suppliers, investing back in the community and keeping the cycle going, Streetcar Bistro and Taproom has provided an example others can follow.