Fund Start-ups? Isn’t that something only the big banks do? Think again.
For generations, community Banks have been the stewards of their customers and communities. They’ve been the incubators for innovation and taken financial risks on start-ups that have often become the bedrock of their communities. In some cases, these start-ups have become insanely successful and fostered sustained growth in these communities.
While your community bank may not be located in Silicon Valley or some other tech-rich location, you still have the opportunity to invite, foster and support innovation in your local community.
Why investing makes sense:
- Job Creation: Let’s start with the fact that start-ups create four times as many jobs as any other large firm. While not all of them survive, a steady stream of start-ups creates a steady stream of new jobs in your community.
- Stronger Teams: Creating a startup support strategy forces your bank team to engage with businesses on a whole new level. Start-ups need support and guidance in financial education, human resources, inventory management and control, understanding financial statements, obtaining investment capital, etc. Taking ownership of and making this type of support available within your community will help to strengthen your own teams’ skills, as well as engage your business clients on a deeper level.
- Loan Growth: A pool of start-ups can lead to a few new promising businesses. This can, in turn, help overcome the stagnant loan growth problem that many community banks are experiencing.
- New Customer Markets: Millennials are more entrepreneurial minded and on an earlier curve in starting their small businesses. Community Banks should support and welcome this new, creative generation. They are your future clients. They get involved in the community. Helping to educate and nurture this entrepreneurial talent is a great way to engage with this generation.
- Pride: It is REALLY FUN when one of your own succeeds!
- Provide financial education and offer constructive feedback on business plans.
- Provide access to peers and other successful entrepreneurs that can help validate and refine business models.
- Help source startup capital.
- Establish an incubator program in your community to assist start-ups and help source investment capital.
- Start a “Community Social Investment Fund” to help fund start-ups. Get other businesses and interested community members to contribute to the fund.
- Provide matching funds to incubator and start up programs as a community reinvestment.
- Provide loans for worthy candidates.
What I am really talking about here is fostering an entrepreneurial attitude within your Community Bank. I think you will find it to benefit and influence how you and your team think about your own business. Maybe you’ll do something innovative and exciting that will transform our industry. If nothing else, you will bring some good old fashioned fun and innovation back into our slow-moving, over-protective, regulation-ridden industry.