Michael Shuman for SCALE - February 25, 2022
Do you have a promising food or farming business (FFB) that needs capital, and all you’ve heard from banks, state agencies, and loan programs is “no” time and again. Don’t despair—there is hope. With new laws in investment crowdfunding, you can now raise capital directly from your network of customers, friends, and fans. And with the expanding toolchest we are making available on this web site, you can do crowdfunding easily and inexpensively.
A little context: The nine counties that are part of our Western New York (WNY) Regional Food System Initiative have about 2.3 million residents. According to 2020 data from the ESRI Business Analyst, they collectively have $133 billion in financial wealth. About $15 billion sits in banks, and the rest is in stocks, bonds, mutual funds, pension funds, and insurance funds.
But here’s the rub: Even though locally owned businesses account for most of the jobs and output in the Western New York economy, they receive a tiny fraction of bank capital and almost none of residents’ long-term retirement savings. Local FFBs, which are mistakenly viewed as “lifestyle businesses,” get even less. Moving even a tiny fraction of these dollars from Wall Street into FFBs could enormously boost local income, wealth, and jobs.
In fact, a growing number of Americans are doing just that. Since investment crowdfunding was legalized in 2016, 1.3 million Americans have invested more than a billion dollars in nearly 5,000 companies. The average company has raised about $300,000 and the average investor has placed about $800 into chosen companies. More than 100,000 jobs have been created. And the disproportionate success stories have been companies run by BiPOC or women entrepreneurs—those most marginalized in the existing capital marketplace.
But this option remains relatively unknown and unused in Western New York. Very few companies here—and almost no FFBs—have taken advantage of investment crowdfunding. Together, we can to change this.
In the Resources section of this website, we have begun to list FFBs looking for capital. You won’t find any investment crowdfunding offerings—yet—but you will find bulk pre-purchasing opportunities, which are another way businesses can secure capital. For example, you’ll currently find the community supported agriculture (CSA) program of West Side Tilth Farm listed. If you write a check to the business for $515 now, you will get weekly boxes of fresh produce big enough to feed two to four people. The money then provides working capital for the farm ahead of the growing season.
Another example: When COVID hit, my wife and I decided to support our favorite restaurant, Busboys and Poets, with a $1,000 check. We told the restauranteur to use it to keep employees in place and just give us gift cards. The proprietor was so pleased, he gave us $1,200 of gift cards—and we got a 20% rate of return off our investment. Our gesture—and the many similar ones it inspired—help keep this and other restaurants in business.
If you run a FFB in Western New York and are interested in this option, we direct you to Credibles, a partner site that puts together bulk pre-purchasing deals. If you want to raise money for your business through donations, perhaps using GoFundMe or Kickstarter, we can list that on our project web site. Or if you want to get a loan or equity investment into your business, we can help connect you with one of nearly 100 federally licensed “portals,” and then we’ll list that offering on our site.
Over time, we hope to make this site a go-to place, not just for businesses looking for capital, but for anyone in the region interested in investing Western New York FFBs. We think there are millions of local dollars each year that can and should start flowing into a healthier, more just, more self-reliant local food system.
If you don’t run a business and just want to invest in FFBs, we can help too. Over time, we will help you find local investment clubs. Or courses on local investing. Or tools for tapping your pension funds. We’ve already posted extensive FAQs that can help you get started.
Please let everyone in the region—businesses and investors alike--know we’re here. If you’re interested in investing, please come visit every couple of weeks (and maybe more often than that) to see what’s available. The power to transform the region’s food system and economy ultimately lies in our wallets.