Put Your Money Where Your Mouth Is
By gigabiting on April 23, 2012
The Wall Street Journal said: 'Forget conventional 401(k)s; think goat cheese and fennel.'
Business Week called it one of the 'big ideas that will change small business and entrepreneurship,' and Time Magazine explored its potential to 'remake America's food industry.'
They're all talking about the nascent Slow Money movement bringing seed capital to local food systems.
This is an idea whose time has come.
Local foods are in the spotlight, focusing our attention on the need to strengthen and promote sustainable regional food systems and move away from corporate agribusiness. And our food interests happen to coincide with an opening for new investment models. The last financial market meltdown convinced us that we need to understand our investments. Forget about credit default swaps and subprime-backed derivatives—let's put our money in investments we can sink our teeth into. Literally.
Kickstarter (and the similarly structured Indiegogo) has had great success applying its crowdsourced funding platform to food-related projects.
It began as the go-to place for filmmakers, designers, and other creative media types, but food entrepreneurs quickly staked out their own small but vibrant corner. Last year more than 30,000 Kickstarter investors pooled their funds- in increments as small as $5.00- to fund 241 food and beverage projects like a community gristmill, a magazine for high school foodies, an urban apiary, a doggie cupcake bakery, and lots and lots of food trucks (plus one tricycle vendor).
This is not a loan or an investment; Kickstarter participants are patrons, and their patronage is usually rewarded in the form of project mementos or perks— a id="mce_marker"0 pledge might entitle you to a snack bag from an organic nut roaster, or $200 to a pickle maker could get you a weekend brining workshop.
Not all your eggs in one basket
Credibles nudges the model closer to an investment.
If an individual were to make a direct investment in, say, an egg farm or a jam maker, payment in-kind would bring them more eggs and marmalade than they would know what to do with. Intead, Credibles creates a single fund from the contributions of multiple investors. The loans it makes to small and artisanal producers are repaid in-kind—a farm returns crops, a restaurant returns meals, a small-batch ice cream maker returns pints of rocky road—but since an investor is buying into the shared pool, repayment comes from the collective pool of businesses in the form of edible credits, 'credibles,' that can be redeemed for a wide assortment of products.
Slow Money for Slow Food
These new investment models are part of the larger concept of Slow Money. Equal parts movement and investment strategy, it takes more than just its name from the global grassroots Slow Food organization. In the same way that Slow Food is a response to fast food and the globalized, industrialized state of our food supply, Slow Money offers an alternative to the fast money of our global financial markets. It asserts that our current paths, both agricultural and fiduciary, are irresponsible, unhealthy, and ultimately unsustainable.
Slow Money redefines investment returns to measure not just profits, which will come more slowly, but to also consider the value of social responsibility in return-on-investment calculations. Land preservation, crop diversity, food safety, and strong local economies all pay their own dividends.
Crowdfunding just got a lot easier.
Earlier this year, a bi-partisan group of senators introduced a piece of securities legislation called the Crowdfund Act. While it adds to the compliance burden of funding portals like Kickstarter, it's a boon to both individual investors and entrepreneurs, lifting many of the regulations that restricted the crowdfunding of small businesses. Approved resoundingly by the Senate, this month President Barack Obama signed it into law as part of the JOBS Act.
You can read the full text of the Crowdfund Act (Senate Bill 2190) at the Library of Congress website.
Gigabiting: where food meets culture and technology.
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