Imagine loaning money to an entrepreneur and receiving dividends in the form of farm-fresh, free-range eggs. This is exactly the kind of partnership that the Slow Money Alliance is forging.
You've probably heard of Slow Food, an "eco-gastronomic" movement founded more than 20 years ago to counteract fast food and its ripple effects in our culture.
Now, there's slow money. Inspired by the book Inquiries into the Nature of Slow Money: Investing As If Food, Farms and Fertility Mattered by a former venture capitalist named Woody Tasch, this movement is all about shifting our economic and financing system in a similar direction: thoughtful, connected to the source, with more realistic and redefined expectations about returns.
At its third annual conference in California this fall, more than 1,000 people gathered, including 27 entrepreneurs representing small food enterprises who netted, according to the Slow Food website, more than $4.25 million from financers in attendance.
Those financers include people like Arno Hesse, a former bank executive in San Francisco who loaned $5,000 to an organic chicken farm. Each month he receives a cheque paying down the principal, along with interest in the form of, you guessed it, two-dozen eggs.
"We want to bring money down to earth," Hesse told the San Francisco Chronicle. "In assessing our investments, we look not just at financial returns but at improving our community and producing better food."
Slow money style
These types of loans are key for emerging small farmers who often don't have the collateral of a commodity crop or land base to secure loans from banks.
Access to capital is a barrier for all small businesses, not just those that are food related. In Canada and the U.S., securities regulations make it hard for these businesses to sell stock to small investors. The Slow Food movement is trying to come up with models of investment that work on a smaller scale.
In September, the Toronto Star reported on Canadian farmers who are cobbling together their own models of slow money-style investment.
Tom Manley of Homestead Organics in Berwick, Ontario, issues Class A shares that pay a six per cent dividend each year. He has 40 investors who have together contributed about $700,000.
He believes the Slow Money philosophy could take off if there were more tax incentives for investors.
"There's loads of capital," Manley told the Star, adding that despite huge market swings and big recession losses, "there still seems to be an ingrained confidence in investing through conventional channels. When they see cases of ours, a private business, they treat it with great skepticism."
The concept is still met with trepidation from investors, and farmers as well. In advance of the first Slow Food annual gathering in 2009, the Wall Street Journal reported on dairy farmers Ed and Michael Lobaugh, who were looking for $50,000 for a pasteurizer and other equipment, but worried that it might be more of a hassle than a traditional loan.
"Specifically, they fear deep-pocketed investors will demand a say in management decisions. Equally perilous: small-sum investors swamping the Lobaugh's with requests for tours and samples, and interminable inquiries about the goats."
Still, the movement continues to grow. The Slow Money New York chapter recently noted the completion of a $4.3 million equity financing round for BrightFarms, Inc., a company that finances, builds and operates hydroponic greenhouse farms at supermarkets.