VSJF General News & Updates
January 30, 2012
The Flex Fund's Year in Review
Vermont's small growing businesses need access to patient risk capital. But in our business culture, "patient capital" may be an oxymoron. We celebrate the entrepreneurs who make it big, quickly, and they are the ones who typically receive venture money. Patient capital has no place in an impatient world. As banks become 'too big to fail,' many of our small businesses remain too small to succeed. It's time for another investment model for small growing businesses - investments in ventures that aren't "built to flip," but rather are "built to last."
The VSJF Flexible Capital Fund, L3C (the Flex Fund) is a new mezzanine debt program launched in 2011 by the Vermont Sustainable Jobs Fund (VSJF) focused on Vermont businesses that are "built to last." We're the first funder in Vermont to focus on providing "near equity" capital - royalty financing and subordinated debt - for growth companies in agricultural, forest products, clean technology, and waste management industries.
We Made Our First Investment
In November 2011, we closed on our first deal to Vermont Smoke and Cure, a branded manufacturer of smoked meats, sausages and bacon that plays a critical role in helping farmers get their products to a broader market - and in a value-added way. The Flex Fund's investment was part of an overall financing package that will help it expand into the former Saputo cheese manufacturing plant in Hinesburg.
Vermont Smoke and Cure needed flexible risk capital to round out their financing package. The Flex Fund helped close the gap and didn't require the company to give away a piece of their ownership. This company is an ideal first loan out of the gate for us because they are helping to build a strong foundation for local and regional food systems, creating jobs, and expanding in a community that has been hit by job losses.
If you're driving through Hinesburg, you can see that construction on VSC's new home is coming along nicely and they hope to move in by late spring 2011.
"The Flex Fund was critical in helping us leverage other money and round out our financing package. It not only provides us with flexible capital as we grow, it also gives us access to a wealth of knowledge through its peer mentoring network. This will help us continue our mission to keep Vermont farmers smoking." -- Chris Bailey, CEO of Vermont Smoke and Cure
We're Building the Pipeline
The Flex Fund continues to build our pipeline of opportunities and since our launch, we've had inquiries, initial discussions and/or site visits with 14 businesses including 7 value-added agriculture / distribution businesses, 5 clean technology businesses, a wood pellet manufacturer, and a forest products manufacturer. We are currently looking at applications from a value-added food producer and two renewable energy companies.
We're Raising the Money
Over the last year, the Flex Fund has raised $1,850,000 in equity to capitalize our fund. We have 16 accredited investors from Vermont and around the country including Maryland, New York, Maine, South Dakota, and Florida! These investors are first movers in supporting a new way of financing Vermont businesses that are building healthy food and energy systems and supporting Vermont's working landscape. Over the next year, our goal is to be fully capitalized at $4,000,000.
But we couldn't have raised private equity capital without support from our state and federal partners who provided initial support for start-up costs and capitalization. Our thanks go out to the Office of U.S. Senator Patrick Leahy who provided a congressionally directed award from the U.S. Department of Housing and Urban Development EDI program and to the Vermont State Legislature for a grant through the American Recovery and Reinvestment Act.
We're Building Partnerships & Strengthening Relationships
We're working with the Vermont Community Loan Fund to provide loan administrative support services. They're a great fit with our mission and values, and for over 25 years, the VCLF has transformed Vermonters' lives by providing equitable access to capital for the development of affordable housing, community facilities and organizations, and local businesses.
We've signed on to the ShadeFund's partner program - they are a joint project of The Conservation Fund and the U.S. Endowment for Forestry and Communities, providing small business loans to promising green entrepreneurs across America. As a partner, we're helping refer prospective borrowers in exchange for recognition on their website and materials. Click HERE for more info.
We have also entered the William James Foundation International Sustainable Business Plan competition, and successfully made the second of three rounds of cuts.
And, We've Got an Amazing Team...
Of course we couldn't have come this far without building a great team that brings fund management, financial, and entrepreneurial expertise as well as passion for our work and a commitment to our mission.
On our Board of Managers we now have:
- Chuck Lief, The Hartland Group
- Janice St. Onge, VSJF Flexible Capital Fund, L3C / VSJF
- Tim Storrow, The Castanea Foundation
- Christine Donovan, Vt. Energy Investment Corp.
- Jed Kalkstein, Management / Financial Consultant (Venture creation & Investing)
- Ex-officio member, David Lane, (formerly of VEDA) Yankee Farm Credit.
Our Investment Committee brings hands-on knowledge in structuring deals, identifying risks and opportunities, and understanding what it takes for a management team to be successful. The team includes: Tammy Newmark, President of Eco Enterprises Fund II; John Kingston, CFO of Butternut Mountain Farms; and Janice St. Onge.
And finally, we continue to leverage the expertise of our Board of Advisors including Bob Barton, The Catalyst Group; Ken Merritt, Merritt, Merritt & Moulton; Dave Marvin, Butternut Mountain Farms; Tammy Newmark; Michael Gurau, Clear Innovation Partners; John Hamilton, Vested for Growth; and Kevin Harper, Angel investor / owner Bristol Bakery.
So thank you to all of our supporters, investors, customers and partners for a great year. We can't wait to see what 2012 brings!