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Slow Money 157
Zentay put together a group of eight angel investors—all
urbanites like himself who care about the environment and protecting
their upstate foodshed—who invested $830,000 in equity
capital. The investors created a separate limited liability company,
Blossom Farms, LLC, that will own the land and processing facilities,
which will be leased back to Milk Thistle on favorable terms.
The LLC owns a noncontrolling percent of Milk Thistle, and in
turn Dante and Kristin Hesse have a stake in Blossom Farms—so
goals are aligned. In addition, Milk Thistle and its investors lined
up close to $1 million in debt, including a seller- fi nanced mortgage
to buy the land, which they plan to convert to a bank loan.
A deal that size—a total of $1.65 million—for a small agricultural
operation is unheard of in the Hudson Valley. “I think
it’s going to be groundbreaking,” says Hesse. “I’m hoping it
sets a precedent and that we can be agents of change.” ( Just
to drive the point home, Freidman was planning to take out
a “tombstone”—the nickname for the ads that fi rms take out when
they’ve closed a major fi nancing deal—in the Wall Street Journal.)
With the additional processing capacity, Hesse plans to work with
other area farmers who want to process their own milk and dairy
products. “We want to help other local businesses,” he says.
A central motivating force for Zentay and his fellow angel
investors was the ability to make an investment in something
that not only provides a fi nancial return, but also refl ects their
values. “I was impressed by Dante’s vision for the company and
his balance of what’s good for the animals and environment
and people and what’s profi table,” says Zentay. “With so many
companies, there is a tension between those things. In the organic
space, those values are aligned. I’ve never been in a deal that the
investors are so passionate about.”
For now, much of the investment in small- scale food and
agriculture is confi ned to affl uent investors such as Zentay and
Lindstrom. We still don’t have the infrastructure and investment
vehicles to facilitate the fl ow of mainstream capital to these types
of businesses. But that is exactly the problem that Slow Money has
set out to tackle. It has a long way to go still, but the grassroots
army is swelling.