A community line of credit: when possibility meets potential

There’s something exciting going on with Community Sourced Capital. Two businesses which  found success getting a loan from their community are at it again. Last summer, the Adrift Hotel borrowed $18,450 to finance a solar hot water installation for their sustainable hotel in Long Beach, Washington. They took on the loan, executed the project, held a party for their Squareholders, and perhaps best of all, they paid back the loan on schedule.
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Marching Roanoke toward possibility

Unlike many southern towns whose centers have been consumed by suburban sprawl over the last few decades, Roanoke has been moving in the opposite direction — revitalizing downtown, investing in the arts, leveraging the incredible natural beauty and amenities, and encouraging and promoting local business like crazy. It’s all in the name of making a great community.

Unlike many southern towns whose centers have been consumed by suburban sprawl over the last few decades, Roanoke has been moving in the opposite direction — revitalizing downtown, investing in the arts, leveraging the incredible natural beauty and amenities, and encouraging and promoting local business like crazy. It’s all in the name of making a great community.

I remember the heart of downtown 25 years ago. It was a seedy, unwelcoming place at night. Now, it’s hoppin’ with local restaurants and shops, museums, music venues, art galleries, and the oldest continuously operating farmers market in VA (which just got a facelift).

10 years ago, there were fewer than a dozen people living downtown. Today, the downtown population is well over 2,000 thanks to the redevelopment of old buildings by progressive developers.

5 years ago, we had one farmers market. Now, we have 5 thanks to a growing grassroots commitment to caring about the origin of our food. That commitment extends to Roanoke’s natural beauty, which has always been here, but is now being rediscovered and leveraged by groups like Roanoke Outside. Events like the Blue Ridge Marathon endure one of the country’s toughest road races.

There are so many things that still need to be done to realize all of Roanoke’s potential. There’s a small ground swell of interest in entrepreneurship. Entrepreneurship requires an eco-system of mentors, investors, infrastructure, and peers. Newly opened places like the CoLab are creating synergistic gathering and co-working spaces combined with programming, in an attempt to stimulate and nurture entrepreneurship that endures in our valley.

Just like everything in life, good things happen when multiple stars align. Roanoke has always had the fundamentals in place to be a truly amazing small city: natural beauty and outdoor amenities, a friendly and welcoming culture and that quintessential easy southern lifestyle.

When preparation meets opportunity, it’s called luck. It takes innovative people to see possibility and prepare their community for it. But that’s just the beginning. The real joy of this work comes when a community realizes its potential and decides to march toward opportunity together–full steam ahead.

Local finance matters

When people put their money to work for a business they can visit in person, an opportunity to see the impact of money in your community is born. Money doesn’t have to be thousands of miles away in New York. It can be just down the road.

We just wrapped up a fantastic loan with The Food Shed, a local business bringing healthy and local food to their community in Kingston, Washington. But we’re thrilled that the campaign brought more than local food to their community. It also brought local finance.

In fact, more than 90% of their Squareholders live within 40 miles of the business. We think that’s a pretty cool statistic, and not just because it’s fun to look at a map of Squares and Squareholders!

Kitsap Food Shed from Kitsap Sun

When people put their money to work for a business they can visit in person, an opportunity to see the impact of your money in your community is born. Money doesn’t always have to be thousands of miles away in New York. It can be just down the road. (My apologies to anyone reading this in New York. I hope you know what I mean.)

So here comes the part about persistence. Even though study after study confirms that locally-owned businesses improve the quality of life for communities, the collective impact of those businesses is still bundled in a complex set of benefits that are sometimes hard to see. In fact, it took a financial crisis for many Americans to see just how much we had taken for granted all along.

The concept here is simple, and perhaps a little redundant: the value of local finance is in visualizing the connection between your money, the financial system, and the health of your community. There’s a dollar bill at one end of the system, a resilient economy at the other, and a whole lot of thriving small businesses in between.

The photo included in this post is of Pam Buitinvield, an owner of The Food Shed. The photo is from the Kitsap Sun’s article Homegrown Loan Helps Kingston Cafe to Grow featuring The Food Shed and Community Sourced Capital.

In Pursuit of Growth and Capital

By sharing a company’s story of growth with its community, and most importantly, by sharing with one’s community an intention for a specific kind of growth, pathways open up for the flow of all kinds of capital.

Let’s start by asking a question: do businesses need to grow? I’ll cast my vote to say “Yes.” Actually, I will say “Absolutely.” Yet, there are many kinds of growth. We can grow up, we can grow out, and we can also grow wise. So let’s make sure we are talking about the same thing.

The economy we know today is pretty attached to a classic growth paradigm that demands growth, and mostly growth that manifests itself in growing revenue or profit or, in its largest sense, GDP. At the micro level, I witness this paradigm in action every time I hear the question, “How are you going to grow this business?” It’s a call you can’t ignore: grow or die.

I’m not about to dispute the value of focusing on growth. It has created tons of progress in certain sectors of our society. But I think it’s worth noting that the kind of growth we have collectively experienced has not treated all parties equally. It might be worth exploring other kinds of growth as well.

People grow in many ways. Children focus on physical growth. The strength and capabilities that come with “growing up” are certainly useful. (Me, I topped out at out at about six feet tall and growing out is… we’ll just say, no longer productive.) Physical growth quickly becomes less important and we move on to emotional and intellectual growth. We grow our capacity for empathy. We grow closer to those around us. We grow wise.

Could business (and even our economy?) aspire to recognize similar limits to physical growth and shift aspirations to another kind of growth?

When we talk about the capital we put together at Community Sourced Capital, we often describe the process of connecting businesses directly to their community as “turning an enterprise’s social capital into financial capital.” The social part looks a lot like trust and strong relationships, and the financial part looks a lot like money. Businesses need financial capital for all sorts of things — including physical growth — and those things change as a business faces new challenges and evolves to fit a dynamic environment. Sometimes, we find businesses looking for growth in terms of product lines or financial maturity. Or, perhaps most exciting, growing in terms of connections to their community. That’s when the social capital part (trust and relationships) comes in.

By sharing a company’s story of growth with its community, and most importantly, by sharing with one’s community an intention for a specific kind of growth, pathways open up for the flow of all kinds of capital: intellectual capital, human capital, social capital. A company that realizes its potential to access all sources of capital will find endless growth.

So, what would you like to grow this year?

Practice alone doesn’t produce work that matters quote

“Practice alone doesn’t produce work that matters. No, that only comes from caring. From caring enough to leap, to bleed for the art, to go out on the ledge, where it’s dangerous.”

“Practice alone doesn’t produce work that matters. No, that only comes from caring. From caring enough to leap, to bleed for the art, to go out on the ledge, where it’s dangerous.” – Seth Godin

Willapa Hills Cheese: one year in

On a cold northwest morning, I spent 30 minutes on the phone catching up with Stephen Hueffed from Willapa Hills Cheese. Stephen is half of the husband and wife team who took an idea for a handcrafted cheese company from a dinner conversation to a growing business in southern Washington. Stephen spoke with me while waiting in the car for his other half, Amy, who was purchasing milk from a supplier they drove to that morning.

On a cold northwest morning, I spent 30 minutes on the phone catching up with Stephen Hueffed from Willapa Hills Cheese. Stephen is half of the husband and wife team who took an idea for a handcrafted cheese company from a dinner conversation to a growing business in Southwest Washington. Stephen spoke with me while waiting in the car for his other half, Amy, who was purchasing milk from a supplier they drove to that morning.

Growing their business has not been easy, and they haven’t tried to go it alone. Their $15,000 loan from 75 Squareholders financed additional cheese-making equipment last year, which helped them increase their production so they could say “yes” when buyers asked for larger orders. That infrastructure loan, coupled with other financing from our local finance partner, Craft3, provided working capital to buy more milk for delicious cheese.

“Prior to these rounds of funding, we would have to decline–or really, stress–about the potential to fulfill those orders,” Stephen told me. When I asked for the secret to his success, he tells it like it is, “Number One, you’re lucky. And two, you’re just stubborn enough to stay with it.”

Amy was recently invited as one of just nine Whole Foods Market Local Producer Loan Recipients to share their products and story with company leadership at a national gathering in Austin. Perhaps it’s a result of Willapa’s ability to grow with opportunity. With those bigger orders comes more responsibility. “We’re in the middle of some of the most rigorous food safety audits we’ve ever been apart of, and that’s just to start selling to a new retailer.” If everything goes well, that rigorous testing will result in one of their biggest orders ever.

The goal isn’t necessarily to get as big as possible. “It’s all relative,” Stephen says. “But the bottom line is that we can’t pay the electric bill based on what we sell to one small retailer. Most small producers top out really quick.” Willapa loves its local stores too, though. They’re entering more local natural foods stores soon. Not all small natural stores like the larger chains. Willapa has to balance those relationships every month–on top of everything else.

Amy returns to the car. Time to get back to work. No rest for these determined entrepreneurs. Stephen ends our call with the same encouraging tone he brings to every corner of his business: “You know, we love it. That’s the core to the whole bloody thing. If we didn’t care, and we didn’t love it, we would have turned back 100 times. And maybe that’s the deal. We’re not lucky. We’re just stubborn.”

Starvation Alley Farms: one year in

Starvation Alley Farms hasn’t stopped moving since we first worked with them a year ago to raise $12,000 for an industrial juicer. In fact, Starvation Alley Farms fueled the very first Square through our lending system.

As the first organic cranberry producers in Washington State, the farm needed a new market to sell their berries. Selling juice to cocktail bars instead of berries on the commodity market revolutionized their revenue model. Instead of traveling from Long Beach to Portland week after week to juice their berries, they were able to buy an industrial juicer to keep at home in Long Beach.

2013 was a year of expanding their juice sales to cocktail bars in Seattle, farmers markets, and even an experimental CSA program to deliver juice directly to people! Recently, their expansion to Portland has found them in a few new locations, and perhaps most exciting, in a great spread from Portland Monthly. You’ve got to see these pictures.

Perhaps the most exciting news from Starvation Alley has been the impact on their own industry. Seasoned farmers have asked SAF to help convert their berries to organic, too. Thanks to the scientific and business expertise the farm has been developing over the last few years, bringing on the second organic farm should be a little easier. To help them finance this next stage, our friends at Craft3, a local CDFI lender, have stepped up with some serious financial support.

People often ask about the story of their name: Starvation Alley. “Starvation Alley,” as deemed during the Great Depression, was the road on the Long Beach Peninsula that housed many hard working migrant farmers. Now, it’s home and work for these cranberry farmers. Though the road is now officially named Birch Street, the locals still call it Starvation Alley. They kept the name as an ode to those that came before and to honor everyone still working hard for food (and drinks).

A&R Solar: One year in

It’s been nearly a year since we first sat down with Seattle solar company A&R Solar to talk about a big project they had in mind for their company.

It’s been nearly a year since we first sat down with Seattle solar company A&R Solar to talk about a big project they had in mind for their company. They were running out of room in a small office in Seattle’s SoDo neighborhood and had their eyes on a new location down the street. It would be a game-changer for the business by adding five times as much office space, plus a warehouse.

A&R Solar was the third company to use Squares to raise money for the business. They hit go on a campaign on an afternoon in February to raise $20,000, and a month later, they had $25,000 in Squares accumulated from dozens of people in their community, including family, friends, customers, and even a few “competitors” in the solar industry. Nearly 200 people came together to lend a little money and move a growing company forward.

“Using CSC to raise money put us in a very vulnerable position of asking for money. The outpouring of positive support from people we knew was incredibly energizing. It gave us a confidence makeover.”

“It gave us a confidence makeover.”
    –Co-founder Reeves Clippard

Two weeks after their campaign wrapped up, they had a check in their hands. They got to work immediately building out the new office. In May, they made their first payment on their loan, and then in June, they encouraged their Squareholders to take part in a new loan through CSC to fund a solar hot water installation for the Adrift Hotel on the Long Beach Peninsula.

Several thousand dollars in repayments from A&R Solar went back to work for a loan to the hotel, and A&R carried out the project. In September, A&R threw a party for their Squareholders to check out the new Seattle office. In October, another party to show off the solar hot water project with the Adrift Hotel, and by the time November came around, A&R’s loan was paid off in full.

Besides the Adrift, several Squareholders have kept their money in the CSC system by using repayments to make loans to other companies running campaigns with CSC. Here’s one example from a Squareholder:

One year later, A&R has been named one of the 100 fastest growing private companies in the Puget Sound by the Puget Sound Business Journal. And it’s no wonder, they’re in one of the hottest industries in town — and it’s an industry that happens to be doing a lot of good for the world. You decide if that’s a coincidence.

CSC and PCC Farmland Trust host Funding Farmers Creative Session

Of the many cool things we get to do when working on finance, collaborating with other local finance groups is at the top of our list of favorite things.

This fall saw us hosting a creative session to discuss finance for farmers, so it was a good thing we had groups in the room like PCC Farmland Trust, Slow Money Northwest, One PacificCoast Bank, UbrLocal and Rooted In. All together, over a dozen farmers and food network stakeholders came together to identify creative ways to raise capital for sustainable farms and to discuss shared goals and values for our regional food systems.

Shared values and concerns

During the course of the evening our discussion revealed some shared values and concerns:

  • Sustainable Stewardship of the land and soil
  • The importance of farmer’s livelihoods and access to land ownership
  • The need to reflect the true value of the services of farms to society and the environment
  • The desire for good food for all
  • Figuring this out inside the existing market (not waiting for some other economy to emerge)
  • Making farms financially viable

The evening came to several conclusions, but above all else, it’s clear that there is both plenty of work to do and the energy, commitment and expertise to do it is right here in our community.

So let’s get back to work.