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Slow and steady wins the race

The need for speedy profits has brought the world’s financial system to its knees. Financial high-flier Woody Tasch believes his Slow Money movement, which invests in sustainable agriculture, can put the economy back on its feet.

“Woody is not chasing where the financial returns are,” he continues. “He’s chasing where our value system says we need to invest capital. Slow Money puts the value system above the purely financial prospects of investing. That’s a radical distinction for those of us who grew up in a free market, where you allocate capital to the places you believe it will generate the highest risk-adjusted return, and the rest will take care of itself. In nature, there is no concept of hoarding. So by investing into local food systems and Slow Money enterprises, even though you’re not maximizing returns, that to me is more in keeping with the natural order of things.”

Eric Becker, a 15-year veteran money manager with Trillium Asset Management in Boston, Massachusetts, agrees. “Slow Money is an effort to find opportunities for investors to support sustainable agriculture in their investment portfolios in a way that hasn’t been possible before,” he says. Since its inception in 1983, Trillium has focused exclusively on socially responsible investing, stewarding $1 billion in assets for its client base of institutions and high-net-worth individuals and families.

“Each year we ask our clients what priorities they want reflected in their portfolios,” Becker says. “For 25 years they’ve been checking the box that says ‘sustainable agriculture and organics.’ But other than a few public companies like Whole Foods or Celestial Seasonings teas, there have been no investment vehicles to target capital toward new or growing companies that have the health of the soil as a key component of what they’re doing.”

Becker believes Slow Money has the potential to change this, and to that end, expects Trillium will deposit a percentage of its clients’ capital into Tasch’s fund. Adds Becker, “There is a growing awareness that to have a truly sustainable civilization we need to have sustainable food systems, and to get there we need to rethink capitalism to make it work at a pace that can help finance sustainable agriculture and food systems.”

Tasch hasn’t even begun fundraising for his new efforts, but the Slow Money movement already has some early beneficiaries. Tom Stearns is the president of High Mowing Organic Seeds, a wholesale and retail vendor of more than 400 types of organic vegetable, flower and herb seeds in Wolcott, Vermont. Founded in 1998, High Mowing sells some $2 million worth of seeds each year, about 60 percent to commercial farmers. Stearns first learned of the Slow Money philosophy in the summer of 2007, while attending one of Tasch’s Investors’ Circle meetings. Today, Stearns described his company as “one early example of a Slow Money deal in practice.”

Last year, as Stearns examined how to finance expansion, he hit a wall. “I realized I was going to need outside capital to make it work. We were not in a position to be able to take on any more bank debt, so [selling more of our] equity seemed the only option. But I didn’t want to set High Mowing on a path that would require us to lose local governance or control over the operational decisions we make. While I am motivated by profit and am always watching that aspect of the company, profit is only one measure of our success.”

Having met Tasch, Stearns was given a Slow Money option. In March, High Mowing raised $800,000 through a private convertible debt offering, in which lenders take equity shares in the company if the loan is still outstanding in five years. “If I had taken on traditional equity investors, it would have been much more likely that I would have to push the [revenue] growth and my staff at an unhealthy rate. With the Slow Money offering we put together, I am able to take a more patient approach to growth and make sure the quality of our seeds and service remain exceptional as we grow. This has led me to realize how crucial it is to have the right kind of financing that matches your company and its vision. What Slow Money has already done has been an inspiration to many agricultural business owners and farmers.”

Tasch insists Slow Money isn’t philanthropy. But can anyone make (enough) money doing it? Becker is surprisingly sanguine for someone with a fiduciary duty to work in his clients’ best interests. “It’s not the size of the fund that matters; the fund just needs to invest and show returns,” he says. “This is about getting the ideas out there. The first Slow Money fund will be small. Yes, it’s experimental, and we’re going to learn a lot as we get into it further, but it’s something that the capital markets really need to address.”

Says Cambridge Local First’s Kanter, “Woody and his movement are pushing us. It’s an attempt to grow the consciousness of what it means to live more sustainably.” Adds Fullerton of Investors’ Circle: “What if money worked the way Woody talks about it working? Wouldn’t that be great, even if we were sacrificing quick riches for the good of the planet?”

Anyway, for Tasch, dollars aren’t the right metric for measuring success and failure in these times. “We live in a world of ever-depleting resources. Money is no longer the currency. Air and water and soil are the currencies of our future.”

Carleen Hawn wrote about spiritual capitalism in the June 2008 issue.

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