Green Scene: Angel investors nurture local-food seedlings
March 10, 2011
By Judith Nemes
Seven Chicago angel investors — mostly former derivatives traders and entrepreneurs — have formed
an investment network to create financing opportunities for small businesses and startups in the local,
sustainable food distribution system.
Members of SLoFIG, short for Sustainably Local Food Investment Group, intend to loan money to small
businesses within about a 250-mile radius of Chicago that participate in growing, processing, delivering,
selling or serving local food. Each participant has committed to invest $25,000 a year for three years.
The idea for the investment network was developed by leaders at Fresh Taste and other local food oriented
organizations who saw a funding gap for businesses in this niche. So says Karen Lehman,
director of Fresh Taste, a funding collaborative of seven foundations (including the Chicago Community
Trust), and the city of Chicago’s Department of Housing and Economic Development. Fresh Taste
focuses on improving the local food system around Chicago and access to good food.
Inspiration also came after Ms. Lehman and others met with Woody Tasch, a longtime venture capitalist
and famed author of Slow Money, a financial guide to investing in regional food networks. Teri Lowinger,
one of the angel investors, is heading up the new investment group.
SLoFIG will make its debut next week when some of its investors show up at the three-day FamilyFarmed
Expo at the UIC Forum at the University of Illinois at Chicago March 17-19.
In anticipation of a business plan competition session slated for the financing day at the expo, SLoFIG
invited local, qualified businesses to submit applications and promised to help groom two finalists to
present a polished business pitch at that event. The investment group has received 17 applications and
has been working with the two it selected to prep for the challenge next week, Ms. Lehman says. SLoFIG
so far hasn’t invested in any companies, according to Ms. Lowinger.
While a good return on investment is an important criterion for businesses that receive loans from
SLoFIG, another critical measure is how these entities contribute to the strengthening web of the regional
food distribution system around Chicago, Ms. Lehman says. Investors could potentially see a higher rate
of return if they placed bets on companies in more traditional industries, but they chose to participate in
the fund because of the high value they place on a durable local food system that reaches a wide swath
of the population.
Crain’s caught up with Ms. Lehman this week to learn more.
CRAIN’S: Why is there a need for this kind of investment network? Can’t these businesses get
bank loans to grow?
Ms. Lehman: From the very start, the founders of Fresh Taste realized we have to rebuild the
infrastructure for local food and we wanted to get the investor community involved. We knew it might have
to be a different kind of investor who invests in some of the businesses that banks may shy away from.
Banks understand corn and soybean out in the countryside but may be unfamiliar with communitysupported
agriculture. Banks also may be unwilling to take the risk of investing in some of these
SLoFIG investors are concerned about risk, too, but because they’re looking at the social return reward,
they may be willing to take a risk that a bank might not. Also, lots of farm-based businesses require
patient capital. And some of these businesses are less concerned with selling their business later. So
how does an equity investor make money? You have to be really creative about how you structure the