Writing the AFI blog, and working on AFI in general has been strange these last many months because of the lack of frustration one would normally expect from that four letter word "w-o-r-k". But one thing certainly has my goat (which should not be confused with my goatee, which those that know me know has recently gone the way of Sampson's hair...) is what I consider the arbitrary and liberty-infringing position of the Securities and Exchange Commission regarding "Accredited Investors". Click that link for the SEC's definition; we can just think of it as "rich folks".
In general, the rule is that you have to be "accredited" to invest in private company "securities", where "security" certainly means private company stock equity, probably means royalty funding, and is generally not thought to mean simple lending. Their thinking is that only rich folks are smart enough to know whether it is a good idea to invest in this or that company. Ignore the fact that anyone, accredited or not, with half a million dollars rolling around in the console can go to the neighborhood exotic car dealer and buy a Lamborghini Avendtador (you be the judge as to whether that is a smart move), but the unaccredited person with $15k they'd like to put into the neighborhood vegetable farmer, can't. That "can't" really kills me, when I meet well intentioned Austinites who want to participate in AFI as investors, but we can't let them.
Fortunately, there are exceptions:
Do you know of other opportunities for Retail Impact Investors? Leave a comment or email firstname.lastname@example.org.
Forbes reports that the Case Foundation and B Lab have created a new, faster, simpler way for companies to measure their "sustainability" and "impact" called the Quick Impact Assessment. Unlike B Lab's full assessment, which takes about 90 minutes, the Quick Impact Assessment takes about 20.
We took the Quick Impact Assessment to see how AFI would fare. Of 20 questions, we ranked "above average" on 10; "average" on none; and "below average" on 10. While thought provoking, it isn't clear that the assessment is appropriate for either start-ups (like us), or specific to sustainable food companies. That said, it did take around 20 minutes!
Lee Hower writes in the NextView Ventures blog about the sources of Venture Capital "Most of the dollars a VC firm invests come from outside limited partner investors (LPs). The actual partners of a VC firm (GPs) will typically invest a minimum of 1% of the total size of their fund."
He continues "but the bulk of the capital in the VC ecosystem comes from large institutions like pension funds, endowments of universities and hospitals, charitable foundations, insurance companies, very wealthy families (aka family offices), and corporations."
In case you're wondering, 100% of AFI's capital comes directly from the private individuals that decide, on their own, to invest in the companies introduced by AFI.
The Huffington Post calls impact investing "Investing for Shared Value" and quotes Michael Porter: "It's a higher kind of capitalism, where investors create social and economic value simultaneously instead of wasting their time investing in companies that are incrementally competing for trivial differences in product attributes and market share." See: their article "Where Does Your Money Spend the Night? Rethinking Capitalism".
SEC Commissioner Luis Aguilar Presses the Need for Greater Secondary Market Liquidity
Crowdfund Insider reports on Commissioner Aguilar's March 4, 2015 speech to the Advisory Committee on Small and Emerging Companies in Washington DC. Writes author Anthony Zeoli: "Unlike traditional stocks and bonds which an investor can generally sell and trade at will in established exchanges (e.g. NASDAQ, NYSE, etc.), there currently is no marketplace to offer and sell most privately placed securities... "The more liquid privately placed securities can be made the more viable they will be to investors and the more capital which will ultimately flow to small business."
You just have to love Woody Tasch. From starting the Slow Money movement to his periodic wide-ranging, tangential, iconoclastic speeches and writing, Woody articulates both the incredulity and the hope of looking our system in the face and bearing down on the work to be done to improve it.
In this speech to the Food+Enterprise pitch-fest in Brooklyn on Feb 28, 2015, Woody lays out his latest, a "State of the Soil": "We are strong in terms of tillage, but weak in terms of fertility. We are strong measured in chemical and mechanical power but we are week in terms of soil erosion, weak in terms of connection to the land, weak in terms of sense of place."
Here's the 13 page pdf of the full speech. Please enjoy!
We launched a new Twitter Feed today, @atxfoodinvestor.
We hope to tweet, like we blog, at the intersection of sustainable local food and angel & impact investing.
Please follow us !
Wendell Berry, farmer, activist, writer, winner of the National Humanities Medal & Guggenheim Fellowship, patron saint of many, writes in the Atlantic of industrial agriculture replacing people with machines, ceding vast stretches of acreage to industrialized agribusiness and losing the stewards of the land.
Close readers and return visitors to our little site here may recall a section called "Library", where we highlighted some of the most interesting research and websites we've come across.
To make way for a new section, "Community", we've compiled all the Library links here. Click "Read More" to see them all...
GMO labeling seems like a no-brainer, but not everyone thinks that way. Especially if they are employed by firms that sell GMO products... Statesman's Addie Broyles explores the issue and reports on a SXSW forum.
Very happy to see many AFI friends winning as Edible Austin's reader chosen "2015 Local Food Heroes": Dai Due, Antonelli's, Springdale Farm, Confituras, Tipsy Texan, and the Sustainable Food Center. Congrats all!
Financial advice and investment management services provider HIP Investor offers a framework, and set of steps, to move portions of your portfolio into "HIP" (human impact and profit") investments.
SustainableBrands.com reports that "several prominent banks announced programs that indicate the further maturation of global environmental finance and the Green Bond market," including $100B from Citibank for climate change mitigation, Euro 1B from Deutsche Bank for Green Bonds, and more.
"The pickle- and jam-making set now gets the tech-startup treatment—with a do-gooder twist", writes Anne Kadet in the Wall Street Journal about the Food + Enterprise Summit held in Brooklyn recently. The event was a Pitch Competition organized by AFI's friend Derek Denkla, where a five judge panel heard business plans from artisanal food makers.
Could something like this be in AFI's future? We sure hope so... Fall 2015?
Austin's Smart Flour LLC, maker of gluten-free flour, raised $3.8M from 23 investors. Article at Austin Business Journal by Christopher Calnan.
In Inc. Magazine's March 2015 issue they publish a very telling info graphic summarizing the results of some of the nation's top business incubator / accelerators... most of which focus on the tech space. Look particularly at the light blue status bar showing what percent of participant companies "took exits IPO, sold, etc). It is tiny - ranging from just 2% (which, if you do the math for that accelerator, having funded 66 deals since 2009, works out to 1 company), to only 11% for the "best" result.
The graphic doesn't show what percent of investor dollar value - i.e. money invested - is still in play (the "closed" rate ranges from 8-31% of the businesses funded... those funds are gone forever); what percent has been returned (from the exits), and what the overall investor rate of return has been. Our bet: not so good.
Our takeaway: sure glad our model is not focused on "exit".
News from AFI; Links to stories on business-for-good, private-company investing, fundraising, & sustainable food.