Boulder-based Transition Colorado, a 501c3, has been working toward food localization since 2007. With our for-profit investment company (Localization Partners) and a Slow Money Investment Club, we’re now focusing on localizing the food supply of the Front Range Urban Corridor, a population area of 4.3 million people and an agricultural base of 9 million acres of farm and ranch land. As in many places, demand for local food here is outstripping supply.
In early 2010, we began shifting the conversation about local food to “food localization as economic development.” We commissioned a study by economist Michael Shuman to estimate the economic impact of 25 percent food localization in Colorado — which, as the study demonstrates, with only $1.8 billion in capital investments would create 31,000 new jobs and $2.2 billion per year in added state GDP.
This early work, along with publicizing the Slow Money approach, attracted an individual who ultimately committed $1.5 million to our stewardship so we could begin actually investing in local food and farming enterprises. In the fall of 2011, we formed Localization Partners LLC and took possession of these funds as a 10-year no-interest loan — and immediately began making investments.
Our experience quickly revealed that many of the farms and food enterprises that needed capital also were going to need significant consulting and hand-holding to make them both fundable and successful — including business plan development. So we formed Localization Partners Consulting LLC, now headed up by Jim Ott, a seasoned ag business consultant.
We also realized that we often would need to bring in high-level management expertise, particularly to support expanding agricultural enterprises, so with Jim we formed Localization Farm and Asset Management LLC.
These structures were activated in the spring when we learned that the largest and oldest organic farm in the region was imploding under the weight of rapid growth, inadequate financial management, crushing debt and devastating weather events. We knew the disappearance of Grant Family Farms would be a serious setback to local agriculture and food localization in the Front Range. Emergency measures were in order.
We assembled a crack project team, did our due diligence, crafted a plan, and as a Phase One intervention set out to finance this year’s $12 million crop, knowing the entire operation would be significantly cash negative until the end of August — exactly the kind of challenge many farmers face.
We reached out to our personal network, several of them members of the Slow Money Investment Club, offering a six-month promissory note backed by the crop and guaranteed by Localization Partners. We quickly raised $1.6 million, and because the farm has since had its most successful season ever, those investors are going to be paid back early.
Phase Two involves lifting the farm out of the ashes by creating several new business entities — each of which will require its own management team and its own capitalization. We anticipate leveraging all of this into a regional network of organic farms encompassing perhaps 10,000 to 15,000 acres over the next several years.
Localization Partners is committed to bringing Slow Money capital into a variety of other Colorado food and farming enterprises, including a much-needed aggregation, processing and distribution infrastructure, which will make it possible for the local food industry to begin scaling to reach its larger commercial markets and begin to meet the growing market demand for local food that now far outstrips supply.
Toward this end, we’re now launching a new investment fund of $10 million, utilizing the consulting and management structures mentioned earlier, along with a team of seasoned advisers. We’re seeking other Slow Money–inspired investors to join us in building a localized Front Range foodshed in Colorado and making the tools and processes of food localization available to other communities. As a footnote, Denver Mayor Michael Hancock (who grew up in an urban food desert) is preparing to announce that the city and county of Denver is setting an official goal of 20 percent food localization by 2020. This is just one of many indications that the Front Range foodshed is beginning to mobilize very powerfully around the local food industry.
In this environment, our Slow Money Investment Club (of which Localization Partners is a member) is also gaining momentum. A year after formation as an LLC, we are approaching 20 members, each with $5,000 invested (modeled after No Small Potatoes in Maine). We’re delighted to have Woody as a member and co-leader of the group. At each meeting, we hear a brief educational presentation by a local food or farming entrepreneur, followed by a lively Q&A session. This has given our members a good understanding of the challenges and opportunities in our local food system, and has led to two initial investments: a $12,000 loan to a local food distribution company based in Fort Collins, and a $14,000 loan to an Army veteran trained in greenhouse management whose small operation will provide year-round organic microgreens to Denver restaurants.