We are involved in a lot of organizations that discuss, encourage and teach about investing in companies. Today, we’ll be attending the Wisconsin Innovation Network Lunch in Madison where Greg Piefer, the founder and chief executive officer of SHINE Medical Technologies, will discuss SHINE’s journey from a campus medical physics laboratory to federal approval of a production plant in Janesville. We spent last weekend mentoring at the Start-Up Weekend. We know and support a lot of investment models, but one model that we get a lot questions asking “What’s that? I haven’t heard of that” is the Slow Money movement. And it is one that we think has a lot of potential in Wisconsin.
So what is it? Lucky for us, the movement has set out six principles:
- We must bring money back down to earth.
- There is such a thing as money that is too fast, companies that are too big, finance that is too complex. Therefore, we must slow our money down — not all of it, of course, but enough to matter.
- The 20th Century was the era of Buy Low/Sell High and Wealth Now/Philanthropy Later—what one venture capitalist called “the largest legal accumulation of wealth in history.” The 21st Century will be the era of nurture capital, built around principles of carrying capacity, care of the commons, sense of place, diversity and nonviolence.
- We must learn to invest as if food, farms and fertility mattered. We must connect investors to the places where they live, creating healthy relationships and new sources of capital for small food enterprises.
- Let us celebrate the new generation of entrepreneurs, consumers and investors who are showing the way from ‘Making a Killing’ to ‘Making a Living.’
- Paul Newman said, “I just happen to think that in life we need to be a little like the farmer who puts back into the soil what he takes out.” Recognizing the wisdom of these words, let us begin rebuilding our economy from the ground up, asking:
- What would the world be like if we invested 50% of our assets within 50 miles of where we live?
- What if there were a new generation of companies that gave away 50% of their profits?
- What if there were 50% more organic matter in our soil 50 years from now?
Or as we think of it, these are businesses and investors that are willing to trade investment monetary returns for community and environmental returns. They are looking for sustainable, long-term commitments, which means that a 10x or 20x return on the investment in just a few months or years is unlikely, but that is OK. Often, the companies are value-added agriculture, but not always. The important part is that they believe that maximizing shareholder profit isn’t the sole goal.
Is this a model for everyone? No way! Not all businesses fit, and not all investors fit. In fact, even those investing in Slow Money type businesses often have some “fast money” investments, too. Purists may tell you that shouldn’t happen, but point to Principle #2 up there where it says “not all of it.” If you are the square peg, there are plenty of square holes. But if you are the round peg looking for the right place to call home, this may be it.
According to the 2014 Slow Money State of the Sector Report, from 2009 to 2013, $31 million flowed through the Slow Money network to 246 small food enterprises. This funding occurred primarily via local networks and investment clubs and, occasionally, through national gatherings. That isn’t chump change. There are definitely some round holes for you to peg into if your business or investment strategies fit these principles
Want to learn more? You are in luck! Woody Tasch, the guy who literally wrote the book outlining those principles, is speaking on May 6 at the Slow Money Wisconsin Showcase. Can’t make it? We will happily lend you the book or you can spend some fast money at Amazon.