When I was assigned to interview someone who deals with financing,
I immediately thought: bankers, Wall Street stock brokers, and those intimidating
(frightening) “angels” on Shark Tank.
I never thought dealing with investments was a particularly interesting job,
but my two interviews – one with Carol Peppe Hewitt, founder of Slow Money NC and writer of Financing our Foodshed; the other with Brian
Griffin, Chief Credit Officer at Mountain
Bizworks and former WCU grad – have changed my mind. Rather than dealing
with corporate investments among “The 1%”, these folks believe in investing
money back into the local economy. Both Slow Money and Mountain BizWorks are
very community focused organizations, so they specialize in helping fund small business
ventures. Being able to chat with both of these generous and informative
interviewees has allowed me to compare the different ways in which each
organization accomplishes a similar mission.
Mountain BizWorks is a Community Development Financial Institution
(CDFI) and has a fairly systematic application procedure for its borrowers;
just like other financial institutions that provide loans (i.e. banks, credit
unions, etc.). Although most investments are typically made using money from a
CDFI fund, the Small Business Administration, or the USDA (United States Department
of Agriculture), they have individual investors as well.
Investors in Slow Money on the other hand, make up its only
source of funding for small business investments. So while Mountain BizWorks creates
a “loan pool” of these monies, then makes investments, Slow Money functions
more as a network between entrepreneurs seeking funds and lenders who wish to
put their money back into the community. This prevents Slow Money from having
to assume any liability; rather, they connect potential investors with budding
entrepreneurs and they enter into peer-to-peer agreements under their own
terms.
Such agreements seem to create strong ties within the
community between investors and entrepreneurs in a variety of ways. Slow Money focuses
specifically on investments for local food entrepreneurs. Mrs. Hewitt described
that they do this by “finding interested locavores
and helping them make connections with people in their foodshed” in attempts to
create a more localized and sustainable food system. So not only are investors
helping to promote the success of these entrepreneurs, they are also helping to
bring about a more just and sustainable food system, starting in their own
communities!
Mountain Bizworks works on a slightly different scale. Of
course they support food entrepreneurs – having helped finance almost all of
the restaurants and microbreweries in Asheville – however they make loans for
all types of business (“besides strip clubs and that sort of thing”), lending
mostly to retailers.
So while making a Slow Money investment would perhaps require
more work, it allows the investor to choose the venture in which they’d like to
invest; thus they can see exactly where their money is going. Borrowers and
lenders are screened to ensure their mission matches up with the Slow Money mission;
however initiating contact is left up to the lender. An investment through
Mountain BizWorks is also sure to help local businesses too, however there’s a
team of professionals choosing the borrowers’ with the strongest applications
and most tangible business plans. So someone looking to invest locally may
choose whichever approach they prefer based on how much they value their own judgment.
But let’s look at something they have in common. One major
thing I noticed is that support from the community is absolutely crucial. Both
interviewees mentioned that the businesses that they’ve helped and seen really
thrive are in communities that support local business – in other words, their success
relies largely on how receptive the city/county is to small business. Likewise,
both focus on making loans affordable and cater mostly to middle or moderate
income borrowers.
Learning about these two methods of investing made me
realize not only how much opportunity there is for a budding entrepreneur (like
me!) to seek investments, but also that there are several different ways to go
about doing it. Recognizing the joy that each of these interviewees has found
in seeing communities thrive as a result of their hard work to help small
businesses succeed has given me a new perspective on the idea of investing as a
whole. Though it was once a seemingly complicated and nebulous concept to me, I
now have a much clearer understanding of how borrowing and lending/investing
works and how exciting and empowering it can be – especially when you can see
the money going back into your community!!
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