[photo] Mark Jeftovic

easyDNS CEO, Career Contrarian & AntiGuru

Investing Local: The Game-Changer for a Dismal Economy

A little less than a year ago while I was driving up north for my annual dose of solitude in a cabin outside of Algonquin Park, I had somewhat of an epiphany. It came after the realization that the miserable urban sprawl that was decimating ever more land around Toronto for sterile subdivisions of cubical houses and big box stores was reaching ever outward from the GTA (green belt, hah!). I was listening to Damon Vickers “The Day After the Dollar Crashes”, which was less about what happens after the dollar finally crashes, and more of a call-to-arms to seriously rethink the way we structure our society. I blogged more about that over on markjeftovic.ca.

The gist of the epiphany was this:

That there is a new era dawning where the smart corporations were going to “get religion” and actually make it a point to be ethical. I don’t mean that they’ll organize “Team Movembers” and send stuffed animals to the Sick Kids Hospital (although those warm and fuzzy things are nice). I mean that they would: start thinking long term, moving toward sustainable business models, realize the role of natural capital in their equations, and start eschewing irrational economic models.

And further, that new “business ethic” was not going to be a liability or an impediment. It would be an edge. Maybe not a short-cut to “quick buck” profits that so many are obsessed with, but more along the lines of a path toward sustained relevance.

One part of that thought was a notion that hit on the way up north: I had gotten to the point in Vicker’s book where he talked about “hydrofracking” and I was pretty mortified. And being a value-investor, for whom an investment is held as actual ownership in the company the question hit me like a fist: Do any of the companies I own do this?

It was then that I realized that even my, modest portfolio was too complex to know for sure (and I’m less exposed than most to public equities). “So what is the solution?” I asked next. The answer came pretty quick. It was simply Investing Local.

Investing Local: The Game-Changer

You’ve got localvores, who eat locally sourced food, shop local, buy as much that is produced within your own community. If people started Investing Local, then instead of punting their money into an anonymously complex mutual fund and hoping for the best (“Pay and pray”), they could allocate a portion of their capital into businesses within their own communities.

By doing this many things could be accomplished:

  • The investor would actually know where their money is going, and what it is doing.
  • It would be more likely to have access and input to the management of the local business. You would have a say in how the business would move forward.
  • The usual benefits of community business: local jobs, local goods and services and the revenues being recycled back into the local community.

Over the next few weeks I started clumsily telling my colleagues and business associates about “my epiphany” about the next “ethical business” wave.  It had varied reactions, most often that it resonated with them and they felt something similar was happening too. But whenever I got to the “investing local” part, they invariably zoomed right in on that point. “Investing local, you may really have something there with that concept”.

When I told my friend, the keynote speaker and futurist, Jim Carroll about it, he wanted to co-author a book on the subject on-the-spot. So we started researching this. Turns out we weren’t alone in our thinking, the book “Locavesting” by Amy Cortese was listed on Amazon as about-to-released, which I pre-ordered, read and recommend to anybody interested in this.

The other thing I did was I started looking for local companies who either had done this, or were looking to do this. After wading through “business opportunity” ads for  a lot of crap businesses and stupid ideas on Craigslist (isn’t that always the case?)  I found this one:

Seeking Partner/Investor for Established Organic Skincare Firm  (Southwest Ontario)

Date: 2011-03-29, 12:49PM EDT

This exclusive & unique little company is ready to grow to the next level. It seeks leadership and working capital.
It requires an industry professional with the right Cosmetic Marketing/Web Marketing/Spa experience, and the capital to invest.
Currently manufacturing over 75 skus of Organic, Petroleum Free and Eco Friendly body care.
Dynamic and Active E commerce Website. Untapped retail market on the internet.
Over 400 established Spa and Boutique wholesale clients across Canada.
Gross annual revenue averages $NNN,NNN
Poised with a new line of products to break into the larger franchise market.
NPN #s are pending with Health Canada for the marketing of alternative & non toxic Sunscreen and Insect Repellent.
Small cosmetic kitchen for manufacturing with larger production outsourced.
This company is all potential and is waiting for the right person to help it grow.
Seeking the leadership experience & capital a new partner/investor can bring.

What happened next is where it the story takes a bit of a turn. After going back-and-forth over the summer with research and ideas, Jim’s already hectic schedule suddenly got busier and was suddenly booked for keynotes all over the place and for a long time. He didn’t think he would be able to keep working on the book.

On my front, I had started talking with Mari-Claire Watkins, the founder of  the company in that ad. They turned out to be just over in Guelph, and after I few phone interviews, I decided to go down and meet with her and see the operation. In the weeks after the meeting I could feel the book slipping onto the back burner, but in the meantime I had already decided: I was going to be the investor.

Introducing: Nature Balance Wellness

So I’m pleased to say that this week we closed the transaction and I’m now a principal in Nature Balance Wellness, or nbw.ca. I’ll be taking on the role of COO, to Mari-Claire’s Founder/President and our business is to provide skin care products that don’t make your armpits burn after you apply them.

I also dusted off the book and have been chipping away at it, because I really think that this is the proverbial game-changer (Jim has agreed to write the forward). By investing local you end-run Wall Street. Your money stays within your community and cultivates a virtuous circle. You no longer compartimentalize stuff you actually own and what your money is doing away from the effects it has on the world. You’re involved, you’re accountable and if you do well and earn some profits…you earned them.

Real Time Analytics