News / USA

Angel Investors Keep Cash Close to Home

Loose networks match money with strapped local producers

Multimedia

Audio
TEXT SIZE - +
Tom Banse

Farmers Crystie and Keith Kisler in the tasting room of their new cidery which was made possible by a local 'angel' investor.
Farmers Crystie and Keith Kisler in the tasting room of their new cidery which was made possible by a local 'angel' investor.

One way some Americans avoided steep losses in the stock market in recent years was by making unusual alternative investments in small farms and food businesses. These so-called angel investors are organizing loose networks to match their money with cash-hungry local producers.

Farmers Crystie and Keith Kisler proudly pour samples of their hard cider and fruit liquors in the tasting room of the new cidery on their small organic farm. Just four years ago, the Kislers weren't sure they could keep their farm whole, let alone launch a new venture.

"We didn't have the income, or the assets or the confidence perhaps even to approach a bank at that time," says Crystie, who didn't even bother trying to borrow money from the bank.

Investing locally

At that same time, Steve Moore - who'd retired after making money in the software business - was looking for investment alternatives. "I started thinking about where else can I get some kind of reasonable rate of return where return can actually be defined more fully than just how much money did I make."

The two parties were introduced by a mutual acquaintance. They sat down at the farmhouse's kitchen table and negotiated the terms of a $205,000 private loan. Moore charged no interest, but instead received a minority share of the new cidery business.

For the Kislers, the notion of an angel investor seemed miraculous but Moore sees it differently.

"This isn't charity. I'm not giving them money. It's not about a tax deduction," he says. "I am actually getting return in full of what I originally put forward, plus a participation in the cidery, plus consumables as dividends."

And the Kislers are happy to write a check to people whose names they know who have actually been to the farm.

LION's club

Moore is one of the founding members of a group in western Washington state dubbed the Local Investing Opportunities Network or LION. He says the well-to-do members have various reasons for joining.

"They wanted out of Wall Street. They wanted to diversify. They just wanted to help strengthen the community fabric."

The members of LION screen investment requests together, but it's up to each individual to decide whether or not to put up their money. Retired pediatrician Kees Kolff also invested in the Kisler's Finnriver Farm. In addition, he's loaned money to and taken an equity stake in a local artisan cheese maker, the Port Townsend Creamery. He gets some unusual dividends.

"Those of us who have invested get seven percent return per year in cheese," Kolff says. "We get a cheese card. I can show you my cheese card, right here."

There are risks to consider. Most of the loans are unsecured, meaning there's no collateral. The equity investments are long term and liquid, meaning investors can't pull their money out quickly. There is also no regulatory oversight because these are all private transactions.

That presents more risk than a traditional bank would take on. But Mark Bowman, a senior loan officer with the commercial lender Enterprise Cascadia, says private loans and seed money can provide a lifeline to new businesses.

"Having local investors like the LION group is very complementary to the lending that we do," he says. "It even fills gaps of higher risk lending that we can't."

According to Moore, LION fields lots of calls from across the country on how to copy their local investment model. He sees it as a sign that more people want to give literal meaning to the old phrase, put your money where your mouth is.

You May Like

Photogallery Pope's Easter Prayer: Peace in Ukraine, Syria

Pontiff also calls for end to terrorist acts in Nigeria, violence in Iraq, and success in peace talks between Israelis and Palestinians More

Abdullah Holds Lead in Afghan Presidential Election

Country's Election Commission says that with half of the ballots counted, former FM remains in the lead with 44 percent of the vote More

Russia-Ukraine Crisis Could Trigger Cyber War

As tensions between Kyiv and Moscow escalate, so too has frequency of online attacks targeting government, news and financial sites More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid