Slow Money – Where Slow Food Meets Venture Capital
February 23, 2010 § 1 Comment
In response to my post “More on Microfinance in the United States,” Scott of slowmoneyaustin.com and rockroom.com mentioned “Slow Money … where Slow Food meets Venture Capital,” and I was intrigued. I’d heard of the Slow Food Movement, but what did that have to do with venture capital? And when Scott suggested that, “Microfinance could be the seed capital to get thousands of food microenterprises going, but what is missing is patient risk capital to take some of those businesses to scale, ” I wondered what the prospects were for such an enterprising concept.
First, Slow Food. If you’re not familiar with the concept, Slow Food USA says, “Slow Food is an idea, a way of living and a way of eating. It is a global, grassroots movement with thousands of members around the world that links the pleasure of food with a commitment to community and the environment.”
Okay, but how does this translate to money? Enter Woody Tasch, venture capitalist, social entrepreneur, and author of the book, Inquiries Into the Nature of Slow Money: Investing as if Food, Farms, and Fertility Mattered. (Read an excerpt on NPR.org.) Mr. Tasch believes that the speed with which money is invested and transacted has increased to an unsustainable rate, as exhibited by the recent worldwide financial meltdown. We don’t know where our money is going, how it is being invested, and what we can reliably expect for a return.
His central thesis is that there is another way to invest, not all of our money, but some portion of it, in local food systems. And he’s trying to get a lot of people to do it: “A million Americans investing 1% of their assets in local food systems.” He calls it “nurture capital.” The result is The Slow Money Alliance, a non-profit seed fund which he founded on a set of six Principles, “[i]n order to enhance food security, food safety and food access; improve nutrition and health; promote cultural, ecological and economic diversity; and accelerate the transition from an economy based on extraction and consumption to an economy based on preservation and restoration.” On the web site, Mr. Tasch explains that:
Slow Money’s mission is to build local and national networks, and develop new financial products and services, dedicated to:
- investing in small food enterprises and local food systems;
- connecting investors to their local communities, and;
- building the nurture capital industry.
In her Wall Street Journal article, “Forget Conventional 401(k)s; Think Goat Cheese and Fennel,” Stephanie Simon describes Slow Money this way:
The crux of the movement is persuading investors to put some of their assets into businesses they can see, smell and even taste — to measure growth not by the flashing numbers on a stock ticker, but by the slow ripening of a tomato. … If all goes well, investors will see a modest 3% profit, maybe 6% over many years. But Mr. Tasch has a broader balance sheet in mind. The real dividend, he says, is diversity: In an era of industrial agriculture, where millions of acres are planted with the same variety of corn and millions of pigs are bred to be genetically similar, small local farms are the ultimate hedge fund. They preserve heirloom seeds and quirky breeds; strengthen the soil with organic nutrients; create local markets that connect producer directly to consumer.
So, in addition to a financial return, the model provides social and environmental returns. Money stays circulating in the local economy, soil is not eroded through the use of chemicals, and the investor actually sees the result of his or her investment. The movement has its roots in Community-Supported Agriculture (CSA), where customers buy shares of local farms in exchange for food products throughout the year, and as John Tozzi pointed out in BusinessWeek, “The emerging model involves several trends we’ve been tracking for a while: crowdfunding, community development capital, buy local movements, and for-profit social enterprise.” Not to mention our health. As David Gutnick wrote for CBC News, “Tasch was hungry for a more focused approach that connected health, food and capital,” forming connections where today there are none. If you’ve not already read them, take a look at two recent Epicurean posts: “Is It Time to Revive Home Economics Classes?” and “Slow: Life in a Tuscan Town.” There is no doubt that our disconnect from what it is that we’re eating is hurting us and it’s hurting the planet.
As with microfinance initiatives in the United States, it would seem that the support of local, sustainable food businesses means a variety of approaches, from small CSA-like initiatives to more capital-intensive projects requiring Slow Money nurture capital. From Dante Hesse who sells the milk he produces on his “a small organic dairy farm in Ghent, NY” at New York City farmers markets for $5 a quart, and who “could sell even more milk — plus butter and cheese — if he could just build a processing plant right in his barn. For that, he needs to raise about $700,000. … Hesse is offering 6 percent interest for an unsecured loan of $1,000.” NPR.org To Tom Manley who runs his family’s chemical-free animal feed business, Homestead Organics, and has more customers than he has feed to sell. In order to grow his business he needs new silos and feed cleaners. “Sure, he found people willing to lend him a few thousand dollars at a time, but he needs about $2 million to meet his goal of doubling the business again in 10 years.” CBC News.com
What if people took seriously Mr. Tasch’s worthy goal of a million people investing 1% of their assets in local food businesses or the suggestion that Mr. Gutnick put forth in his article: “There are more than 50,000 philanthropic foundations in the United States. Their assets total $400 billion US, most of it invested in the stock market. Needless to say, that money would be a game changer if it — or even a fraction of it — was reinvested in local agriculture.” Sustainable, low environmental impact businesses producing healthy, organic food. Long-term, sustainable investments made by individuals expecting a modest financial return while knowing they’re doing good. A change in mindset. A change in expectations. A change in what and how we eat.