Jarred Maxwell (left) and Tandem Farm Co. owner Jordan Bednar (right)

The Right Shirt

One of the most difficult things I’ve experienced
 about working within the Slow Money community is
 the uncertainty that comes with trying to move in a
 fundamentally new direction. We are moving away 
from decades of centralizing, governmental, regulatory, 
and social institutionalization toward local investing in 
local food systems and a more hands-on and direct form of financing such ventures. It’s a bit unnerving, because there are no road maps for what we are doing—we have to create them as we go.

Sometimes, I wonder if this is what it felt like for folks working at
 NASA in the ’60s. They wanted to get to the moon, but no one had ever done anything like it before. There was no well-defined path, just lots of very smart people, a strong vision, and gobs of optimism and passion.

I see Slow Money in a similar light—except working in the opposite direction, of course, toward the earth, the soil, and in a highly decentralized, low-tech way. However, I think what we are up to, collectively, is just as important as getting to the moon, if not more so. We are confronting problems of soil degradation, erosion of community, lack of sense of place, high-frequency trading, the decline of small-scale agriculture, and all the related cultural and economic impacts of these detachments. I feel lucky to be playing a small part in this important social experiment.

I have immensely enjoyed my time as the local Slow Money leader here in Texas. I am excited when we try something new. I keep learning. I draw from what others are doing around the country—what has worked for them and what hasn’t. As my Austin Foodshed Investors cofounder, Curt Nelson, once said, “We’re just trying on new shirts until we find one that fits. Then, we’ll wear it for a while until we find one that fits better, and then we’ll start wearing that one.” I think that perfectly summarizes how we operate here in Texas, and I believe it’s the same for the entire Slow Money family.

We have tried on many shirts to see what fits with central Texas. We have borrowed ideas from other networks, and we have come up with some ideas on our own. In the process, we have learned a great deal from each project/opportunity we have explored and each has contributed to the successes we’ve had in our Austin Foodshed Investors model.

Tandem Farm Co.

Tandem Farm Co. received $11,000 from AFI members to construct new hoop houses.

So what have we learned?

After returning from Slow Money’s third national gathering in 
San Francisco in 2011, a few of us decided to get to work facilitating the flow of money into small food enterprises in and around Austin. We looked at what Arno Hesse and Marco Vangelisti were doing with their Northern California network. We also looked at the No Small Potatoes investment club structure in Maine.

Our first effort was modeled after the latter. The Sustainable Texas Investment Club had 13 initial members, all contributing a minimum of $2,000 to our funding pool. Our initial total was $28,000, which we used to make low-interest loans of up to $5,000 to local food entrepreneurs.

At the same time, we were deeply engaged in other Slow Money Austin enterprises. We held potlucks, annual events, dinners, and funding forums. We hosted four different Pitchfests for entrepreneurs looking for funding—one attracted more than 150 people. One was organized around entrepreneurial videos, with the winners invited to speak at Earth Day Austin. At times, we were flying high, after pulling off what, by all accounts, were wonderful events, generating considerable public interest, and promoting a great Slow Money conversation in the community. However, when the dust settled, we still had not generated much in the form of investment. Money just wasn’t moving.

The group of volunteers and community activists that made up 
Slow Money Austin was good at hosting events, generating excitement, and driving new discussions around local food systems and local investing. Our Facebook and Twitter followings grew quickly and attendance at our events met our expectations, but we were still lacking a vehicle for getting enough capital to flow.

You may not be surprised to learn that we were not entirely satisfied with our limited impact. After about two years in operation, we were still making small loans, most less than $3,000. We had a handful of thank-you letters and letters of support from the companies that we did lend to—a gluten-free baking-mix maker, a grass-fed cattle rancher, a small-scale farmer, a small recycling-collection company, and a startup aquaponic-farming outfit. There were plenty of good things that came out of the group, which brought together both accredited and nonaccredited investors and fostered quite
 a bit of learning.

However, in the end, we felt that the overhead and the management of the LLC—creating K1s, annual filings, payment handling, etc.—was too much work to justify the size of the loans that we were making. When this was paired with our struggle to get a quorum for voting decisions at our monthly meetings, we questioned our next steps. Was it time to fold it up? Should we change our membership guidelines? Should we double or triple our contributions and increase our loan sizes? Did we need to expand our membership and develop a more cohesive and active group of investment-club members?

We were also learning that the prevailing startup-financing ecosystem and the conventional wisdom of angel investors in and around Austin were not a good fit for small-scale, locally-focused businesses—especially small food enterprises. Austin has a strong startup ecosystem, with plenty of private capital changing hands, but it’s all focused on tech and companies with exceptional growth objectives. It was becoming clearer all the time that we would never see a salsa company turn into the next Facebook or what folks in Silicon Valley call a unicorn: something that would eventually be valued at more than $1 billion. So, if that is the case, why should we use the same funding paradigm to value and support a local, small food enterprise as we would to evaluate a tech company?

When our local food entrepreneurs and farmers got in a room full of these kinds of investors, they were doomed from the start. “What do you mean, there’s no exit? How will I get a return on my participation in a convertible note?” The entrepreneurs were out of their element, and so were the investors. They couldn’t communicate. It was like getting the engineers and salespeople from a tech company together for a meeting—they just speak different languages.

So, it was time to try on a different shirt. How could we organize ourselves so that we could be nimble enough to make quick decisions on small loans, while still having the ability to complete a half-million-dollar raise when that was warranted? Could we find a group of investors who understood how self-liquidating vehicles work, why they are important,
 and when they are necessary? How could we help small businesses navigate the minefield that is the fundraising process, filled with convertible notes, recaps, unit holders, preferences, and the like?

Out of all these questions, Austin Foodshed Investors was born (borrowing its name from Foodshed Investors NYC).

We started with the idea of an angel network, but one whose mission would be more in line with a community development financial institution, complete with impact reporting. We quickly realized that our little project would also have to integrate some of the elements of an incubator, educating both investors and entrepreneurs on alternatives to the
 “fast growth, top-line revenue-at-all-cost, burn-’til-you-exit” mentality. 
We would call this new approach “Bootstrap+.”

From the back of a napkin in mid-2014 to formally launching in early 2015 and then on to today, this seems to be the shirt that fits here in Austin. In our first 18 months, we have talked to over 120 companies and more than 75 investors. We predetermined to take things slow, to take the time to clearly define our internal processes. We brought on a third partner with small-business-development and CFO experience. Then we built a network of more than 30 angel investors—no dues, but with a clear sense of direction and intention.

Sweet Ritual

Sweet Ritual co-owners Amelia Raley and Valerie Ward received $20,000 through Austin Foodshed Investors.

2016 has proven to be a breakout year for us, with seven deals totaling over half-a-million dollars in the first six months of the year. As of this writing, we have another $500,000 term sheet in the works. So, it looks like funding for the year should easily exceed our lofty goal of $1 million.

Our deals have ranged from $11,000 for a pasture-raised chicken farmer to buy hoop houses to $210,000 for a small-scale commercial kitchen/incubator. A larger deal that is in the works is for a regional, sustainable lamb producer and distributor—think Niman Ranch for lamb. All of these deals have followed our Bootstrap+ model, with companies taking smaller, incremental amounts of money to reach a finite milestone before repeating the process in a pace-appropriate, stair-stepped approach to growth. All but the largest deal currently in the works have been debt-based via self-liquidating vehicles, designed to allow the companies to grow at their own pace without giving away large chunks of equity or requiring an exit that would inappropriately loom over decisions on how best to manage their businesses.

I’m regularly amazed, inspired, and now and then, to be honest, a little puzzled by the continuing complexity of Slow Money around the country. We’re all heading in the same direction and yet there is an amazing amount of individuality in the efforts that are making progress here, in North Carolina, in Maine, in Vancouver, and elsewhere. It is the beautiful combination of a common good coming to fruition at many local levels, each network finding their own way—finding the shirt that fits them the best for their current place and time.


Jarred Maxwell is the cofounder of Austin Foodshed Investors. He has been the local leader for Slow Money Austin since 2011. He is an active angel investor in more than a dozen local, socially-responsible companies. In 2010, Jarred founded The Happy Land Company, which specializes in the acquisition, restoration, and preservation of rural land. He started his career as an engineer at Dell. A lifelong Texan and rancher, managing more than 400 acres of family ranch outside Lampasas in northern Burnet County, Jarred lives in central Austin with his wife, Sommer, and their young son.

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