Just attended a very useful workshop on Community Supported Enterprises, a model for investments for local businesses.I’ll leave my questions to the end after I give you some details…
3 examples were profiled:
Claire’s Restaurant, Hardwick Vermont is a LLC (actually 2 LLCs) that has 3 groups involved: investors in the real estate group, owner/managers (3 people) and 50 subscribers/lenders.
The one owner raised money by knocking on doors and reaching out to her network, since she was the only long-time Vermonter among the (3) owners.
She found investors who invested in the real estate group which owns the lease (and subleases to the restaurant) and the equipment. Their investment is very long-term and they were told that at the beginning. If the restaurant fails, they can get someone to take over the new lease.
The subscribers/lenders gave 1000.00 each to the restaurant itself and get their money back in increments of 25.00 in 10 months of the year over 4 years at the restaurant. The subscribers can transfer ownership of their subscription and family can use the subscription. There is no cash out provision. Since the restaurant does not own the equipment, it does not have major debt.
The Community Store, Saranac Lake NY
Is a C-corporation and has a board of directors of 7 and 3 full-time staff. Issued stock at 100 each to NY residents, goal was to raise 500,000, which took 5 years to do.
Shares can be transferred to out of state holders after 9 months. Since there is no majority stockholder, there is little chance for formal financing.
They ended the offer with 750 investors, mostly by asking their early shareholders to host “share” parties where board members could sell stock. Did constant events to keep their name and idea in front of people throughout the 5 years. Got the last 42,000 because of an in-depth New York Times story on cover of Sunday edition.
Massachusetts, Southern Vermont
Classic member cooperative, different levels of membership:
Standard: 975.00 over 2 years
Farmer: 750.00 over 2 years
Limited Resource: 500.00 over 2 years
Buying Group: 250.00 over 2 years
Green Worker: 50.00 plus 6 months of work at Co-op Power
They also raise money through project loans for specific projects:
Biodiesel Project: 500.00 min, 5 years, 650k raised
Energy Efficiency Project: 500.00 min, 2-5 %, 5 years, 90k raised.
Here are the questions that occurred to me:
So, why haven’t farmers markets taken this model to find their start up?
And why don’t we see more cooperatives at market management level?,’
And why not project loans among the shoppers and farmers for short-term projects to create merchandise or an earned income stream for the market or for a farmer?