LION tops $7M locally: Investment network showcases progress at March 25 event

Allison Arthur
Posted 3/21/17

Earll Murman stopped at Sunrise Coffee last Thursday, bought a cup of decaf and then went around back. There, owner Sue Ohlson was preparing to roast beans in a $100,000 machine that Murman and other …

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LION tops $7M locally: Investment network showcases progress at March 25 event


Earll Murman stopped at Sunrise Coffee last Thursday, bought a cup of decaf and then went around back. There, owner Sue Ohlson was preparing to roast beans in a $100,000 machine that Murman and other investors helped Sunrise to purchase.

If it hadn’t been for the connection she had made with members of the Local Investing Opportunities Network (LION), Ohlson isn’t sure how long it would have taken to get a loan from a bank for the roaster. She was going to have to make payments to buy the roaster, custom-made for Sunrise; traditional banks didn’t like that idea.

Murman and a handful of other members of LION didn’t mind taking a chance, because they knew Sunrise co-owner Ohlson and trusted her. And so they invested in that roaster.

“People I’ve told about this, they all ask, ‘Is there a LION where I live?’” said Ohlson of LION, a first-of-its-kind local lending network that was born in Port Townsend a decade ago.

Since 2006, members of LION have invested an estimated $7 million in Jefferson County businesses and nonprofits, according to the most recent survey of the investments, which was conducted by EDC Team Jefferson’s executive director, Brian Kuh.

It’s been six years since LION investors shared the data and invited other investors to join them and prospective new business ventures to approach them. They’ll be making a free public presentation from 4 to 5:30 p.m., Saturday, March 25, at Finnriver Farm & Cidery in Chimacum.

Ohlson is set to be one of the business owners to talk about her experiences with LION. She said the roaster she was able to buy has helped grow her business and she expects it to keep on growing.


At a recent informal gathering to talk about LION, Murman and former Port Townsend mayors Michelle Sandoval and Kees Kolff recalled how LION started informally around the time Michael Schuman, who wrote “Local Dollars, Local Sense: How to Shift Your Money from Wall Street to Main Street,” spoke in Port Townsend.

“Hollywood Video was threatening to come to town, and a bunch of people decided they are going to boycott it,” said Sandoval. “At that meeting, I stood up and said, ‘We’re always going to be reacting. We should be proactive and support the businesses we want to see come here.’”

After that, Sandoval said, there were meetings at which organizers tried to figure out a mechanism to connect investors and local people needing money to start new businesses or grow existing ventures.

“It was always sort of under radar, and then Local 20/20 became more organized and their website became more prominent,” Sandoval said.

Around that time, Crystie Kisler of Finnriver Farms brought in some samples of her cider and blueberry brandy to a meeting.

“We sat in this office, and people tasted it and they decided how much to invest,” Sandoval said.

James Frazier, a private financial adviser, worked to be sure the fledgling organization didn’t run afoul of the Securities and Exchange Commission (SEC).


“The documents had to be carefully crafted to say this is merely a network through which individual people can make connections with different businesses and make their own negotiations to what they want to lend,” said Kolff.

“Which is why we don’t know how much we’ve loaned out,” admitted Murman.

Individuals who are members of LION make the investments, not LION as an organization. LION is not a bank.

LION still functions the way it started: A business owner with a financial need contacts LION with a proposed “opportunity.” That used to be a member of LION, who would then email the proposal to all the other members, who then would get in contact with the person offering the opportunity.

Kuh now takes in those applications for investment opportunities and new investors.

If prospective investors like a business proposition, Kuh arranges a get-together, and then the investors separately loan money to the business. The interest rates and pay-back timeframes are between the individual investor and person seeking funding.

Not every opportunity draws interest.

“If within two weeks they haven’t heard from someone in the network, that probably means there isn’t enough interest,” said Kolff.

About 30 percent of the proposals don’t get funding, and the communication with those people seeking loans has been difficult in the past, the three agreed.

Those looking for funding can check off on the application whether information needs to be kept in confidence or if the information is OK to be made public.

“It’s extremely sensitive, particularly in a difficult real estate market, if people are going to invest in property or they’re trying to get a rental, you have to be very careful,” said Sandoval.

There have been several breaches of confidential information in the past, the three acknowledged. That’s one reason the group now goes through EDC Team Jefferson, which handles the intake of applications.

“I can’t tell you who I’ve invested in because I can’t remember who wants it to be known or not,” said Kolff.


Murman, who has invested in several ventures that failed, said people should be aware of the reality of that risk.

“People who invest and think there is no risk are not thinking,” Murman said.

And there have been occasions when the interest rate has dropped from 7 to 4 percent to even 0 percent to try to help a business venture stay up and running.

Kolff acknowledges that he’s accepted in-kind products or services in lieu of cash, which was fine with him.

“We invested in a company that did not succeed because of a divorce,” Sandoval said. “That guy would come back to our house and deliver payments whenever he could, religiously, whether it was $25 or $100. If he hadn’t, we understood the circumstances,” she said.

Sandoval said her investment was supposed to help the business get through the winter and it was supposed to be for only nine months. Instead, it took the man three years to pay off the loan.

And Murman had a similar experience with a company that liquidated its assets.

Despite the failure, Murman said, “They paid us back. We’re good friends. We go out to lunch. There’s a whole social dimension to investing. You learn to rely on each other.”


While it is not known how much money the investors have made over the years, what investors like Kolff, Sandoval and Murman focus on is the number of businesses LION investors have supported over the years that have made it and are thriving.

“As I drive through town from the rotaries [roundabouts] to Point Hudson, I count 15 businesses or nonprofits in the Sims Way–Water Street corridor that have been helped by LION investors,” Murman said. “Collectively, they have over 140 employees.”

While the greatest concentration of LION-investor-supported businesses are in Port Townsend, there are a number throughout the county, from Port Hadlock and Chimacum all the way to Brinnon.

Hope Roofing co-owner Jordan Eades said that between 2012 and 2016, Hope experienced a 50 percent year-over-year increase since Hope’s first loan through members of LION.

During those four years, Eades said, Hope has had 1,879 customers and paid $5.2 million in wages. Her employees are supporting 26 children who live on the Olympic Peninsula, many of them living in Jefferson County.


It’s not only for-profit businesses that can obtain funding from local investors.

At a recent public event, Sandoval was pleased to hear Janette Force, executive director of the Port Townsend Film Festival, talk about how grateful she was for the support.

“I didn’t know she was going to say it, but it was great kudos for LION members and our community that we kept the film festival healthy,” Sandoval said.

Peninsula Home Care is another organization that recently benefited from financial support through LION members, and both investors and business owners are expected to talk Saturday about their experiences.

“We want people who are interested in becoming LION investors and people who may be interested in receiving LION loans,” said Murman.

“Opportunities,” said Sandoval. “This is the perfect time. I’ve just spoken with young people who want to invest and they don’t want to invest in Wall Street. They had their concerns. They were concerned about the effect [of their investments] on the world,” Sandoval said.

LION investors and investments are all about local and “investing in your neighbors and your own community,” said Sandoval.

Back at Sunrise, Ohlson said she recently sold a “she-cave” trailer she wasn’t using to some friends who are starting a crepe business, La Crepe de Quimper. The friends are starting their business out on Thursdays in front of Sunrise Coffee. And maybe, Ohlson said, they might be at the discussion table come Saturday to talk with prospective investors.