Many people relate to angels and have their own definitions of them. In the food system world, “angels” are investors, often known as venture capitalists (VC), typically focused on startups that hold promise of fast growth and exits to allow for large financial returns. VC investors understand that only 1 out of 10 investments will likely succeed, and often choose to invest in the technology sector. In my experience as the Coordinator of Slow Money Maine (SMM), I have found most VC investors to be quite averse to investments in the new food economy because of the perceived risk. These investments often involve food businesses that don’t have an exit strategy and that intend to remain independent and place-based, staying well connected to the communities that they serve.
I’d like to suggest a new definition of “angel investors” who are building Maine’s local food economy and proliferating outside the meeting rooms of Maine’s VC groups. They are represented in SMM’s network of individuals, foundations, financial institutions and government agencies that have helped catalyze over $14 million into Maine’s local food economy. We have been courageous where venture capitalists (VC) have backed off, and are choosing to meet the mix of high financial risk and high social/environmental returns, in support of relocalizing a vibrant food economy that has been dominated by multinational corporations for decades.
With the support of these “angels,” we are seeing meaningful change in all regions of the state, through the many small to mid-sized farms and fisheries and larger infrastructure businesses that focus on processing (meat, poultry and grains) and trucking distribution. Maine Grains, Blue Ox Malthouse, Heiwa Tofu, Thirty Acre Farm, Tide Mill Farm, Crown of Maine Organic Cooperative, Two Farmers Farm, and New England Fishmongers are among the many enterprises that have benefited from angels’ support—and not only support in the form of loans, grants and equity, but also in bringing technical assistance to help businesses grow. SMM angels have recognized the complexities of our culture and food system elements and are becoming social change leaders through their intentions and actions, preferring “staying strategies” (a phrase from one of our network business entrepreneurs) to “exit strategies.” The challenges remain constant and daunting, but the growing partnerships of angels and entrepreneurs are deepening relationships and hopes for a regenerative agricultural and economic future. Let’s celebrate the real “angels!”
Maine Grains is an example of a business that is making an array of local food available in the Northeast with the assistance of local SMM angels. After founding the annual Kneading Conference in Skowhegan, that annually brings together professional and amateur bakers from around the country to hone their craft, Amber Lambke set about starting a grist mill to restore a grain economy in Maine. The mill has become a vibrant community hub in downtown Skowhegan, with a year round farmers market in the parking lot on Saturday mornings, and a restaurant serving wood-fired pizza and local foods on the first floor. Maine Grains is sourcing wheat, oats, rye, spelt, corn, and heritage grains from 26 Maine farms and is supplying freshly milled, nutritious stone-ground flours to bakeries, breweries, restaurants, natural food stores and universities throughout the northeast. Maine farmers had been growing grains as a rotation crop to improve soil fertility often selling them as feed grain for animals. Maine Grains created a market for them to earn more money by growing to food trade specifications.
A combination of conventional and slow money financing helped Lambke launch her business. Skowhegan Savings Bank’s mortgage offering, loans from friends and family, and a Community Development Block Grant, allowed Lambke to purchase the four-story Somerset County Jail in Skowhegan’s downtown to house processing operations and an Austrian stone-grinding mill. Working with the Somerset Economic Development Corporation, a pioneering fiscal intermediary and fiscal sponsor, several individuals and foundations from the SMM network made early grants to support the business. SMM organized a group of “patient lenders”, to finance building renovation and equipment with loans that accrued interest for five years before repayment would begin.
It became clear that this enterprise was moving forward slowly and intentionally, with a long horizon for financial return. Additional capital was needed to help the company add staff and more equipment, to expand the mill’s capacity. All stakeholders worked creatively with a skilled food system lawyer in VT that resulted in some initial investors converting early loans to equity, while others wrote down/off their loans, and others increased their investments. The local bank stepped in again to provide a second mortgage, and a local CDFI made an equipment loan and equity investment. Along the way, long-term and new supporters of the business offered technical assistance in many forms, from business planning to grant writing, from marketing to financial analysis, and more. Some of this work has been done on a pro bono basis and some on a fee basis.
Maine Grains has no planned exit strategy. The equity is structured so that investors may redeem their investment after a certain period of time at a percentage of the value of the company or at the value of the original investment plus accrued dividends, both defined in the stock agreement. To be sure, this is a slow money investment requiring patience to see relatively low financial returns. To be equally sure, the additional benefits are compelling: farmland has been kept in productive use with farmers earning a premium for food grade crops, and the company has created good jobs and economic vibrancy in a community with many empty mill buildings. The business has made innovation possible throughout the food chain as breweries source rye, wheat and oats to add flavor, color and texture to their beers. The Maine Brewers Association just purchased beer handles for taps that say, “Made with Local Grains.” Bakers are experimenting with slow rise, naturally fermented breads made from grains that they previously couldn’t source. It is possible in Maine to eat crackers made with local grains.
Maine Grains is but one example of businesses that reflect deep commitment to a relocalized food economy that is collaborative, interconnected, and community focused. These businesses have differences but share slow growth and slow financial returns, so VC angels have not typically been attracted to them. Nonetheless, we need more of our new food economy angels who value pioneering roles in creating a regenerative agricultural and economic system that recognizes the importance of local enterprises that honor people, place and the environment while having economic impact. We know that these angels exist and encourage more of them to engage in their own communities to create healthy, vibrant local food economies and the communities that they serve.