‘Credibles’ Can Make Omelets for Years
By JESSE HIRSCH
Investors are often advised to avoid putting all their eggs in one basket. But in the Bay Area, a new investment model is being tested at the intersection of the Slow Food and Slow Money movements.
The premise is simple: lenders contribute to a farm, restaurant, or artisan food business. Investor meetings take place in kitchens and barnyards. Return-on-investment is measured in ice cream bars, sauerkraut and, yes, baskets of eggs.
Arno Hesse hit on the idea for the new crowd-financing model during a kitchen-table investment meeting at Soul Food Farms in Vacaville, in Solana County. Mr. Hesse and eight co-lenders had cobbled together a nontraditional $40,000 loan for the farm, where interest payments would be made in eggs.
“We thought it would be great to let Soul Food pay back the principal in product, too,” Mr. Hesse said. “But there’s only so many eggs one person needs.”
Mr. Hesse and the others realized that if multiple food businesses were financed from a shared pool of money, investors could use their edible credits — he calls them “Credibles” — for a wide assortment of products.
“A consumer might want to help me out,” said Kathryn Lukas, owner of Farmhouse Culture, a sauerkraut business based in Santa Cruz, “but they can get their investment paid back in ice cream.”
To avoid complicated regulations around small business lending, the Credibles system is technically presented as a pre-payment rather than as a loan or an investment. There is no interest accrued, but financiers can receive bonuses for their contributions.
Gelateria Naia, based in Berkeley, will give investors a 10 percent bonus for a $250 contribution, so $250 becomes $275 worth of gelato. At higher investment levels, perks include invitations to special tasting parties or the option to custom-design a gallon of one’s favorite flavor.
The idea for Credibles arose from the Slow Money movement, which focuses on finding new sources of capital for small farms and other food enterprises. Its larger goals are to strengthen and promote sustainable, local food systems and move away from corporate agribusiness.
Befitting the Slow Food and Slow Money movements, the Credibles movement is off to a deliberately slow start. Just five businesses have partnered with Credibles so far: Soul Food Farms and Amber and Son, two Northern California chicken farms; Parish Hall, a farm-to-table restaurant in Brooklyn, N.Y.;Farmhouse Culture; and Naia.
Even so, Mr. Hesse said interest from both investors and food businesses via their Web site, credibles.org, has been overwhelming.
He has fielded inquiries from food businesses in Arizona, Vermont, and even Colombia, but the model becomes tricky if there are no other participating businesses nearby.
Parish Hall is the only Credibles business in New York so far, making it difficult for local contributors to cash in their credits for, say, Soul Food Farms eggs or Naia gelato.
A funder recently put $1,000 into Parish Hall. Mr. Hesse said he is not sure what to do until more New York businesses sign up.
“It could take three years to eat their tab,” Mr. Hesse said.