We are a work in progress !

Our Goal Nationally• Identify prospective founders of new regional

No Small Potatoes Investment Clubs• Convince you that our Investment Club

Model is easily replicable.• Establish 10 new clubs in 2011.

Can you start one of them?

. . . And the story begins• Slow Money Maine brought us together.

• Rebuilding our local food system• By Maine people for Maine people.• How can Maine feed Maine?

• Start small. Be willing to experiment.• Change is hard. Make it accessible.• Make it a launching pad for bigger projects.

Our local organic distributor was financing her Farm suppliers’ needs through cash flow -Seed potatoes, a pallet of jars, fertilizer - that Would increase her sales and her farmers’ Helping both become more profitable

Last summer we learned of some immediate needs.


Jeff and Maho needed to purchase a full season’s harvest of their very first Maine Grown Organic Soybeans. They had been sourcing from NY on a monthly basis. $1,200/month vs. $15,000 in October.


Simon and Jane needed to update their labels to comply with new requirements. Professional design and more cost-effective but bigger printing runs required money they could not spare.


Jamie and Andy started small with their tempeh business, making small batches and purchasing ingredients week to week. They could increase profit margins by making bulk ingredient purchase. This took capital.


First Lesson: Do it. Don’t wait. You can make a difference.

These loans energized us. Others wanted to join in on the

fun.

• Can we pool our funds?• Can we do this without big upfront legal &

professional fees?• Will the Securities and Exchange Commission

(SEC) be concerned?• Does the state regulate Investment Clubs?

Issues:

Two Goals• Help individual Farmers and food

businesses. • Begin lending money locally - now!

Possible solutions.• Continue to make individual loans but use

the wisdom of a group for loan decisions.• Put MOFGA into the microloan business by

funding CDs at a local bank to guarantee loans

• Start a Bank or Credit Union• Create a Mutual Fund or Private

Investment Company.

The Investment Club IdeaVery popular idea typically used for

traditional Stock Market investments

4 ½ million hits

What is an Investment Club?

• A group of people that meet regularly to pool funds and make investments.

• Profit & Education Component

Advantages of Investment Club Model• There are thousands of successful Investment Clubs.

Proven Model.

• SEC has provided easy-to-follow guidelines. Safe.

• Clubs provide education, camaraderie and buying power, plus the confidence of knowing you don’t have to go it alone.

• Getting to know our dozen new club colleagues and the eight farms that we have loaned to has enriched our lives.

5-Easy Steps to start your own Club

1 Identify your founding members.• Don’t go it alone.• Find at 1 - 4 partners to help.

2Use our policies or adopt your own

• Our club decided• Loan Amounts from $1-5K• Limit to 20 members at $5K each

• Your policies should reflect the desires of your members

• FOLLOW SEC GUIDELINES• Members need to accept that their

money is at risk.


http://www.sec.gov/investor/pubs/invclub.htm

3 File legal paperwork to create your local NSP entity.

• Partnership vs. Corporation• Uncertain? Consult an attorney


4 Identify initial producers needing loans.• Set yourself up with success

• Farmers with stellar reputations• Farm visits• Identify small projects

• Loan should fully satisfy need.• How will the loan be paid back?


5 Make loans• To companies not individuals• Use a promissory note• Feel Good


5 Make loans.4 Identify initial producers needing loans.3 File the legal paperwork2 Agree on your policies1 Identify your founding members.

The 5-Easy Steps

Loan Decisions• We are not a bank. But we want to make

good loans. That is the dilemma.• We make decisions based on character,

references, farm visits . . . and financials.• Can borrower simply explain to you how the

loan will be paid back? • On paper, our loans are risky.

Details, Details, Details . . .

• For year 1, we have limited membership to 20 investors.• ALL members agree to be ACTIVE participants.• Minimum investment $5,000.• Loans from $1,000 to $5,000. No Startups. Borrower must

have cash flow and have existing products and services.• Applicants assigned a 2 person team to evaluate loan

application. Scheduled farm visits (if possible).• Majority of members (not quorum) vote for loan decision.• 5% loans. Terms from 1-3 years.• Every member kicks in an extra $100 for expenses.• Make sure members understand risky nature of the loans.

Club Operations• Regular schedule and meetings.

• 2 - 3 loan rounds per year• Elected Officers.

• Recruiting investors. • Recruiting borrowers.• Loan Tracking and tax reporting.

• Very Necessary. Some accounting background needed.

• Sharing our Investment Club Model• Add some social aspects to your club

And that’s our model• Taking action on the ideals of Slow Money• Entry point to expanded community investing.

• Gateway to larger scale projects.• Your members are your prospects.

• Don’t like our model? Create your own. There’s a lot of work to do. Get started.

• Learn by doing. Don’t wait.

Goal:10-clubs / $1 million

We can do this.

Microloans make a difference!

We loaned Molly $$ to buy this van to help her increase the Amount of produce she could take to farmers markets.

We loaned Gail working capital to farm in 2011.

Microloans make a difference!

• SEC Guidelines for Investment Clubs (Web page)• Sample Operating Agreement (pdf) (MS Word)• Sample Loan Criteria (pdf) (MS Word)• Sample Loan Application (pdf) (MS Word)• Sample Promissory Note (pdf) (MS Word)

Links

http://www.sec.gov/investor/pubs/invclub.htm

http://www.saddlebacklakerental.com/NSP/MaineNoSmallPotatoesOperatingAgreementSample.pdf

We are a work in progress !

Documents

Transcript of We are a work in progress !