Slow Money Thriving in Oregon

Community investing efforts are growing across the Pacific Northwest! There are various LION networks in the region, different crowdsourcing efforts, and two formal networks in Oregon that have organized around Slow Money.

WFFC_circle_logoSouth Willamette Valley
Inspired by a visit from Woody Tasch to the University of Oregon in early 2013, a few attendees set out to help build resilience in their local food and farming economy. They went on to form Slow Money South Willamette Valley with a mission to catalyze low-interest loans to local, sustainable food and farming businesses in their region.  

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Slow Money SWV had their first public gathering in December 2013 where they catalyzed 3 loans to local food and farming entrepreneurs. In just over a year, they’ve catalyzed 10 loans totaling over $98K through a peer to peer lending format. 

For more info about SMSWV contact Erin Ely at erin@slowmoneyswv.org.

SOSlowMoneySouthern Oregon
Farther south in the Rogue Valley, Southern Oregon has its own network appropriately named SO Slow Money.

SO Slow Money had their 2nd annual Home Grown Finance event on August 5th with several local emerging farm successes. They brought in $47,500 in private Slow Money seed investments last year and 4 of the 8 companies currently in their summer accelerator came through SO Slow Money.

We are incredibly excited for the future of local sustainable farming in Oregon thanks to these sustainable food champions. These fellow Cascadians are “bringing people together around a shared vision. It starts with the soil, entrepreneurs are the seeds and Investors are the water.”

For more info about SO SLow Money contact Rosetta Shaw at rosetta@svtg.org.

2012 Year in Review

“ Better late than never” – a wise, busy person

Slow Money NW was very busy this past year, and expects 2013 to be a major growth year. Due to this exciting craziness, our year end report comes a few weeks late. I want to keep things brief, and since it is always best to build on previous work, I want to build on September’s Quarterly Update.

As we enter our third year of operation, we see our track record attracting more attention, businesses, and funding. The highlights for this year involve innovation in microlending, launching an agricultural savings incentive program, securing new funding sources, and formalizing our approach to business assistance.

Seeds of Success
We launched our Seeds of Success savings incentive program in the last quarter. The program, implemented in conjunction with our friends at with Cascade Harvest Coalition, is part of a national effort to help beginnning farmers and ranchers grow their businesses.  We received 37 applications in December, supporting the notion that this type of work is needed. We are busy right now reviewing applications and interviewing farmers. This week the Everett Herald ran the most recent article about this program.

Farmer Reserve Fund
Our Farmer Reserve Fund launched in the second quarter and received a lot of attention for its innovative approach to solving the problem of farmers needing access to microcredit. We received immediate press for this loan loss reserve fund, have held discussions with four other counties in the region about replicating the program, and have responded to calls from others around the country wanting more details. A regional CDFI wondered if we could find them $60,000 that would allow them to make $1 million in new loans. A foundation wondered if they could do the same thing but with a $1 million reserve. Great news, but the best part of our program is that from our initial investement, two farmers from Viva Farms received lines of credit to allow them to expand their businesses. Both farmers had suffered foreclosures during the mortgage crisis and were unable to get credit through normal banking channels, and are now successfully paying down their balances, and rebuilding their credit as they grow their businesses.

We have made 5 presentations about this fund with the next one being a BALLE Community Capital webinar Feb 5th.

Of note: this week the USDA announced their Microloan program. This is very exciting for all involved. We will make sure to let folks know about these funds. We will research the details of this new opportunity to make sure we are not in competition. We are particularly interested to see if they will offer lines of credit.

Angel Professional / Peer Network
We continue to have success connecting volunteer professionals to businesses needing specific assistance, usually financials and cash flow projections, business planning, legal, marketing, and presentation coaching. To date, 42 businesses have received personal assistance. As the number of businesses has grown, we have needed to formalize the process.  We have the good fortune to welcome Betsy Powers and Bert Loosemore, super-volunteer and management team member respectively, who have spearheaded this effort. If you are a business professional or organization interested in assisting food and farm businesses in WA, OR, ID, and MT, please contact us.

Food Investor Network
In previous years we held one accredited investor event per year due to limited resources. This year we held three, with two in Portland. Our hope is to hold four this year. Our fourth quarter Seattle meeting had 6 businesses make pitches to 29 investors, with over $2 million of potential investments entering in to the due diligence phase. The best investor comment from that event: “It is so refreshing to see real businesses with OK presentations compared to polished presentations with shaky business plans.” In two years, with limited staff and minimal outreach, we have helped bring over $5 million in financing to eleven businesses in the Pacific Northwest, and we have all of you to thank for your interest, business submissions, investments, and support.

Strategic Market Research
Our track record and increasing expertise in the field has attracted interest from foundations and individuals seeking to use investment and market forces to transform the regional food economy. During the holidays we received funding from the Robert Woods Johnson Foundation to develop a market analysis and investment plan for the regional farm-to-institution market.

SMNW has consistently heard of interest from accredited investors in a fund that allows investors to pool their resources, both time and money.  A few investors have recently asked us to help them develop a managed fund concept focused on the regional food infrastructure. This conceptual fund would allow us to increase efficiencies in deal volume and due-diligence, and better manage risk which should, in turn, enhance the quality of deals and hopefully reduce or spreading out risk. The timing of this work is perfect as we can align fund research with the other market analysis research we are doing for at least one other grant project. If you are an accredited investor and would like to support this effort, or just learn more, please contact us directly.

Growth
Signups to our newsletter and visits to our website, Twitter, and Facebook pages have all seen a steady increase through the year. We are aggressively upgrading our data systems and web presence to accommodate all aspects of growth.

With all of this work comes the need to grow the organization. In the second quarter we brought on Japhet Koteen who has excelled as a Project Manager. Japhet has been focused on finalizing the Farmer Reserve Fund, developing the Seeds of Success project, researching potential fund development, and generally helping grow the organization. SMNW is sharing a Development Coordinator, Ellen Sabina, with Viva Farms and Growing Washington, which means Ellen is busy writing grants. Go, Ellen!

We are proud that we can now bring Japhet on full time. We are currently interviewing for a Business Research Intern and will be seeking a Communication Intern in the first quarter of 2013

Financial help for start-up farmers

The Everett Herald posted an article today about our Seeds of Success IDA program:

Financial help for start-up farmers
By Debra Smith, The Herald Business Journal

Nathaniel Talbot is serious about becoming a farmer.

The 29-year-old relocated from Portland to Whidbey Island to take a farming training program at Greenbank Farm. Now he and his partner, Annie Jesperson, have leased an acre on Whidbey Island and are growing and selling fall and winter vegetables directly to 30 customers.

Their biggest challenge isn’t working the land or finding customers. It’s getting established in a business that is, as Talbot puts it, “highly capital-intensive.” Tractors, land, a greenhouse — the costs of getting started are high even for a farmer who wants to start small.

He hopes a new program will help. Talbot was one of the first people to apply for a program aimed at new farmers and ranchers. If he’s accepted, it will help him save money for a big purchase.

The program is a rural agricultural Individual Development Account. It’s being offered jointly by two local nonprofits, Slow Money Northwest and Cascade Harvest Coalition.

See full article at http://www.heraldnet.com/article/20130114/BIZ/701149980/

Quarterly Update

SMNW was recently asked to prepare an program overview for a regional proposal. This seems to be a perfect way to share what we have accomplised to date. Please contact us with any questions.

Slow Money Northwest (SMNW) catalyzes investment and business development opportunities to strengthen the Pacific Northwest’s sustainable food economy. SMNW focuses on connecting investors interested in food and farming with food and farm businesses seeking investment. Since opening it’s doors in 2010 SMNW has provided business development assistance to 34 WA and OR based businesses and successfully helped 7 businesses secure investments of just under $4 million.

SMNW works from the understanding that funding and financing may be available for low-risk and established businesses as well as high-flying tech startups but not for small businesses and social enterprises the local markets are demanding. SMNW has identified various gaps within the finance continuum for businesses trying to engage in the healthy regional food market segment: business development services; microloans and lines of credit below $20,000; risk tolerance to fund new and small enterprises; opportunities for investors to meet businesses seeking financing; an overarching strategy that better matches supply to demand for healthier food produced close to regional markets; ability for businesses to safely crowdfund from the large, non-accredited investor community.

SMNW has developed projects that directly address these gaps and collaborates with foundations, regional CDFIs, community banks, credit unions, and business development programs where appropriate. Engaged businesses are screened for traditional indicators of jobs, revenue, management team, cashflow, and quality of plan. We also screen for sustainability metrics including sustainable acreage under production, source of ingredients, fair labor practices, and target markets.

The longest running project of SMNW is our Food Investor Network that directly connects investors with food and farm businesses, with regular meetings now occurring in Seattle and Portland. SMNW reviews business plans and makes comments with the goal of preparing businesses for a presentation meeting to an audience of accredited impact investors who understand that a financial investment yields more than just a financial return. The reality is that most businesses reviewed need technical and business development assistance as much as they do financing.

Concurrent to developing these meetings SMNW discovered people in the community eager to help but who were not capable of investing. These individuals now make up the SMNW Angel Professional network that connects professionals to businesses needing finance, legal, accounting, marketing, and business plan development assistance.

SMNW recently launched its Farmer Reserve Fund, a loan loss reserve program that combines the lending infrastructure of an existing credit union, the hands-on experience of a farm incubator, and a limited impact investment to extend credit to beginning farmers who are good risks, but not qualified on paper. Our goal is to replicate this program in King County once we secure a networked due diligence partner who can provide a non-financial review of fund applicants.

SMNW has been contracted to develop a Washington State Beginning Farmer and Rancher Individual Development Account project geared towards incentivizing financial education and building assets for new farm businesses. The project is under development and will launch this winter.

SMNW is helping lead conversations among regional foundations, banks, and investors interested in a more strategic approach to investing in the businesses we need. Current discussions include a tiered investment fund with the potential for a larger, regional meeting in early 2013.

SMNW is closely following the developing crowdfunding regulations with the goal of engaging more people safely in community investment strategies.

Growth of Slow Money NW is constrained by deal flow (ability to connect with aligned businesses truly ready for investment), funding to provide a more formal technical assistance program for small businesses that are not yet ready for investment, and general operating support.

Press Coverage of Farmer Reserve Fund

Sample of coverage from Grist’s online site

We definitely struck a chord with our Farmer Reserve Fund when we launched it last month.  With limited distribution, we received numerous requests for interviews and many groups are interested in replicating this success.  Check out the articles published so far, and if you’re interested in covering the topic, or learning how to create a program like this in your area, please contact Japhet Koteen.

Farmer Reserve Fund Launched

Santiago Lozano (right) with his approved operating line of credit secured by the Farmer Reserve  Fund standing next to  Grow Food’s Executive Director, Ethan Schaffer, and NCCU loan officer, Carolina Chavez

Thanks to all the great work from our friends at North Coast Credit Union (NCCU) and Viva Farms, and with the generous support of our social impact investors, we have officially launched our Farmer Reserve Fund to help beginning farmers grow their businesses.  This is the first piece of our food and farm microfinance effort as we work to make it easier for local agriculture producers to grow their businesses. The first Farmer Reserve Fund loan was made through North Coast last Friday to a strawberry farmer named Santiago Lozano.  A second loan  closed on Monday to Nelida Martinez, a vegetable producer. 

Slow Money NW developed the loan loss reserve fund as a way to fill a gap in financial services  available to small-scale farmers and to meet the interest of regional investors seeking to support sustainable agriculture most effectively.  Slow Money NW, a project of the non-profit Grow Food, did not want to administer the loans so it looked to partner with a regional lending institution. “We wanted to build on existing infrastructure in the community, and deliver services efficiently by building relationships, rather than reinventing the wheel — the reserve fund structure through North Coast is a perfect match.” said Japhet Koteen, Slow Money NW’s Project Manager.  

 
As a co-operative credit union, NCCU doesn’t take big risks with their depositor’s money, but they desired to help farmers in their community. Charitable donations from two local impact investors were used to establish the reserve fund to reduce the risk for the credit union.  Viva Farms provides an additional layer of due diligence for the fund by screening their student pool for the best potential financing candidates.


The Farmer Reserve Fund is a win for the credit union which puts its deposits to work in their community, and a win for the investors that donated the reserve funds since each dollar they put into the fund means up to five dollars available to lend out to beginning farmers. The farmers also see immediate benefits. “It is very difficult for new growers to access credit, “said Lozano. “ I will reserve some of my line of credit to cover any emergencies that come up. The rest I will use to pay my harvest crew before I get paid for sales.” Martinez says the loan is allowing her to grow her young business. “Thanks to this program, it’s much easier for new farmers like myself to get a loan and keep moving forward. We’re very thankful for the extra help in realizing our dreams.”  

Learn more about the Farmer Reserve Fund here.