Editorial: Food for investment thought
Wednesday, April 11, 2012
In a conference today at Smith College, creative match-making could shape an important new tool for Valley economic development. The dollar figures aren’t huge, at least in an age when Facebook will pay $1 billion for a photo-sharing company with a dozen employees. But the value of linking investors with socially worthwhile local enterprises?
Gaining access to investment capital is the entrepreneur’s toughest fight. Today’s program at Smith, the PVGrows Spring Forum, will explore creation of a Community Capital Fund that would channel dollars put up by Valley residents into new enterprises.
On Monday we told readers of how a Hadley couple, Andrea and Christian Stanley, used an initial loan from the Western Massachusetts Enterprise Fund to create an old-fashioned malt house that processes locally raised grains. Their product is needed to make beer and ale, one of the Valley agricultural sector’s hottest sidelines. The business sells its malt across New England. The couple later tapped a loan from the PVGrows Loan Fund to quadruple the size of their operation.
What is the PVGrows Loan Fund? It’s not your grandmother’s bank, that’s for sure.
The fund pools money from a variety of organizations that want, because it suits their missions, to invest in the Valley’s food system. One investor has been the Franklin County Community Development Corp., whose mission is to foster economic success at the grassroots level. Other investors in the PVGrows Loan Fund include Common Capital (formerly the Western Massachusetts Enterprise Fund), the Lydia B. Stokes Foundation, Cooperative Fund of New England, the Solidago Foundation and Equity Trust Inc.
The fund could fill a big gap in what’s available. Typically, a low-profit business with sustainability and community as part of its mission is not attractive to conventional commercial lenders, though we’re sure there are exceptions. The loan pool will pay close attention to applicants needing to borrow $50,000 to $250,000, for that’s a category under the threshold of what concerns commercial banks. PVGrows plans to widen its focus from start-up local food businesses to include any farm or food business.
Also today, an afternoon program at the conference will form an entity to be called Slow Money Pioneer Valley, its name a play on the “slow food” term that describes dramatic alternatives to a fast-food industrial culture. Slow Money Pioneer Valley will seek to help broker connections between investors and local food entrepreneurs.
Here in the Valley, local farmers markets are thriving, in part because people wish to invest, tomato by tomato, in these local food businesses. The Community Capital Fund provides a means for people to give their small investments more clout.
As the Stanleys’ story illustrates, small investments can get big results. The couple will use their second loan to dramatically expand Valley Malt’s capacity. It will be able to process four tons of locally grown grain each week instead of one ton. That is good for their company, and also strengthens the underpinnings of Valley agriculture by expanding the local market for grains like rye, wheat and barley. The couple plan to branch out into farming themselves by planting 35 Northampton and Hadley acres in grain.
Creation of the Community Capital Fund will enable people who wish to invest in small projects to see their dollars join with those put up by others – and then put into use by local ventures, particularly in food.
Sam Stegeman, a spokesman for PVGrows, said he and others have had to tell would-be investors to wait. The fund, which organizers hope to launch within months, could change that.