Bringing money down to earth

CURWOOD: As America considers ways to pick up the pieces of our smashed up economy, a former venture capitalist suggests that fast money helped to derail it. Woody Tasch says any fix must include slow money-- investments and returns at the pace of sustainable business development.

For slow money think slow food. The slow food movement pushes healthy, sustainable local food, in contrast to fast food that mostly comes frozen on a truck, and takes profits out of communities. Woody Tasch is chairman of Investor's Circle, a network of sustainable investors and author of the new book, "Inquiries into the Nature of Slow Money: Investing as if Food, Farms, and Fertility Mattered".

TASCH: We need slow money quickly. You know, the truly insane thing would be at this point in time, knowing what we know about the planet and knowing what we know about the weak underbelly of global capitalism, it would be complete insanity to just try to hit the reset button, put a little bit more regulation in place, pump a lot of money into the system and hope for a different outcome. You know, the relationship between our species and the planet is now coming to the fore in obvious ways. And we have to take some of our capital and bring it down to earth, slow it down, invest it in healthy relationships between enterprise and the biosphere.

CURWOOD: How slow are we talking about here? I mean, what's the rate of return on this kind of investment?

TASCH: Five percent. The approach here is to go squarely at the gap between philanthropy and venture capital, which is a gap which leaves tens of thousands of small local first sustainable enterprises without access to risk capital. And there are actually tens of thousands of these enterprises all across the United States, businesses like the White Dog café in Philadelphia or Butterworks Farm up in Vermont. Cow Girl Creamery in California. Wholesome Harvest in Iowa. So a whole host of small food enterprises that are not in business to try to become global corporations, but are in business to create thriving, profitable small enterprises that enrich their communities and leave the planet better for future generations.

CURWOOD: So, venture capital, and that's the business that you used to be in, you would get –what, 20 or 30 percent return?

TASCH: Well, the venture capitalist shoots for you know five or ten times his or her money if a few years. So the actual rates of return are phenomenal when you do the arithmetic they can be 100 percent, 200 percent, 500 percent.

CURWOOD: There's a point in your book when you talk about what venture capitalists told you in response to various sustainability proposals that you brought to them over the years. I'd like to tick off a few. "I have a moral obligation to my investors to minimize risk and maximize returns." "It won't be big enough." There's another that says, "I want to live in a community that has ten companies with a hundred employees each, but I want to invest in a company that has a thousand employees for that one company." How do you change that way of thinking?

TASCH: It's not easy. [Laugh] I sometimes ask investors to ponder the following question. What would the world be like if we invested 50 percent of our assets within 50 miles of where we lived? And when you say that to a group of investors, you get a blank look at first, and then maybe a chuckle or two, and then they say, "of course, that's ridiculous, what a stupid question." And then it starts percolating a little bit and they begin registering how profoundly disconnected their lives as citizens are from their lives as investors. Investing is all about sending your money into markets, into cyberspace, into complex intermediation. And the fact that at the same time, the places where we live are being degraded, this is a very basic disconnect.

~ more... ~