Buying local, artisanal, and organic is one way to help change the way our food is made — but getting a real alternative production system off the ground will also take cold, hard cash.
We’ve written about the Slow Money Alliance on Grist before — it sprang up as an alternative to “fast money” and what founder Woody Tasch calls our “out-of-control capital markets.” Slow Money steers investment dollars to small food and farm businesses. And it’s no coincidence that it sounds an awful lot like Slow Food, the movement that came to life in the late 1980s in response to the rise of fast food and the breakdown of local food traditions.
But, until recently, Slow Money has been aimed at people who can write a check for $5,000 or $50,000 to finance a food or farm startup. Now the organization has made it easier for people like you and me — people who want to see big changes in the food system but don’t have big dollars — to get involved through a new fund called the Soil Trust.
Now, the regular Joes can chip in as little as $50 online to help organic farmers, butchers, and jam-makers grow, and small-scale meat processors and food hubs get off the ground. The Soil Trust is meant to democratize the world of venture capital for people without deep pockets or investment experience but who happen to care about where their food comes from.
“If you want there to be Slow Food, we have to use more than our consumer dollars,” Tasch says. “We also have to use investor dollars.”
Small food businesses need help. Some large banks have all but given up on lending to small businesses, and venture capitalists often can’t be bothered with small food companies in particular because they’re never going to see the explosive growth you might find with high-tech startups. In this world of “fast money,” small food businesses may appear as unattractive as a winter tomato.
If it weren’t for Slow Money, companies like Austin, Texas-based Greenling might not even be around. The company takes food from local organic farms and delivers to people ordering through a website. Raising capital has been a constant headache, says Greenling owner Mason Arnold.
“In seven years, I’ve had three months where I wasn’t actively fundraising … Traditional banks don’t want to touch us,” Arnold says.
So he went to the 2010 Slow Money conference and raised several hundred thousand dollars that he spent making the company’s website easier to use.
“We weren’t able to meet the demands of growth,” Arnold says. “People wanted to buy from us, but they were frustrated by our website. If we couldn’t have fixed that, I think we might have chased away more customers than we earned and we would have gone under.”
Arnold went back to the third Slow Money conference a year later and drummed up even more cash. It was used to expand to Dallas, and in a few short months, Greenling will be delivering organic food throughout Houston, a place where nearly six in 10 adults are obese. Soon he plans to expand throughout the Southeast.
“Slow Money,” Arnold says, “has been integral to the growth of this organization.”
The Slow Money Alliance already works with angel investors and foundations, which write checks for $50,000 to $500,000, and the $5,000 investors who may pull a little from their retirement accounts and attend their local Slow Money chapter meetings. Those who give to the Soil Trust, on the other hand, may never go to a meeting.
“They just say, ‘Right on, make it happen. Here’s my 50 bucks. Put it to work,’” says Tasch.
Most Soil Trust investments will be loans to small food and farm businesses, ranging from a couple thousand dollars up to a couple million. The bulk will fall into the $20,000 to $50,000 range. The Soil Trust may also offer other types of financing, such as equity investments, grants, and royalty arrangements, where a percentage of a company’s revenue is used to pay back the investment.
Tasch introduced the Soil Trust fund to the Slow Money network in October. By April, when the next Slow Money conference takes place in Boulder, Colo., he hopes the Soil Trust will have received enough donations that it can begin investing in promising food businesses spotlighted at the conference. About 30 or so small food entrepreneurs pitch their business models to investors at each national gathering.
They are companies like AgSquared, a small business in New York that raised $20,000 through Slow Money to help it create software tools that can make recordkeeping and planning easier for farmers. Or there’s Brooklyn Grange, a commercial farm that grows organic fruits and vegetables on 2.5 acres of rooftops in Brooklyn and Queens. The venture raised $25,000 through Slow Money, and began operating at a profit during its second year.
One of the group’s investment principles involves putting back into the soil what is taken out. To that end, the Soil Trust was created as a nonprofit. Investments put into the fund are considered tax-deductible donations, which are pooled together and invested in food businesses.
The model, where all returns stay within the Soil Trust, is similar to Habitat for Humanity or the Acumen Fund, which finances social entrepreneurs trying to tackle global poverty. But the Soil Trust is the only grassroots group of this type that is funded with small donations and focused exclusively on local food systems, Tasch says.
“Those funds get to be recycled, recaptured, and reinvested,” Tasch says. “So you’re really creating something that’s more about putting back, rather than taking out.”