[Scpg] Funding local food businesses with edible credits: If you eat, you’re an investor, By Arno Hesse

[Wesley Roe and Santa Barbara Permaculture Network]

Funding local food businesses with edible credits: If you eat, you’re an 
investor, By Arno Hesse
Posted on January 22, 2013 by Editor
How often do we hear “We need Slow Money, fast”? Investing money in 
small food businesses can be a lengthy process, in many cases open to 
accredited investors only. The new crowdfunding service Credibles, 
https://credibles.org/ homegrown in the Slow Money family, makes it easy 
to fund local food businesses by paying for your food ahead of time, in 
exchange for edible credits.

Here’s how Credibles works: Food enterprises issue store credits for 
money received in advance. Customers and fans prepay the business on the 
Credibles website. In exchange, they receive a balance of Credibles — or 
edible credits — that they “eat up” over time. One Credible equals $1.

When customers make purchases, a simple transaction on a smartphone or 
tablet subtracts the purchase amount from their Credibles balance. In 
the same way bars keep a “tab” for their regulars, Credibles maintains a 
“prepaid tab” for local food purchases. Both the customer and the 
business have access to the remaining balance and track how the credits 
are being eaten over time. This eliminates the problem of lost gift 
cards and replaces the need for pen and paper for store record keeping.

To make Credibles financially appealing, participating businesses offer 
an extra bonus for paying early. For example, a yogurt producer gives a 
customer 10 percent extra when he pays $200 or more up front. That means 
he receives 220 Credibles.



Strengthening community with Credibles

Credibles offers users flexibility that not all prepay funding models 
can. The ascent of CSAs has shown the effectiveness of creating a 
stronger relationship between eaters and producers. However, many 
customers find that the CSA schedule doesn’t fit into their life’s schedule.

Crowdfunding sites like Indiegogo or Kickstarter have demonstrated the 
potential of sourcing funds from the community. These sites are better 
suited for donations (T-shirts or other symbolic rewards) or for 
financing prototypes, whereas Credibles supports using store credits 
flexibly over time.

In the future, the new service will expand user options by linking 
prepaid businesses within the Slow Money community. That means customers 
will be able to use their edible credits at other participating 
businesses and Credibles will take care of the backoffice accounting.

Why pay for sustainable food in advance?

The Credibles model provides cash flow up front for a business’ 
operating needs. Most food businesses require a cash infusion before 
they have product to sell. The chicken farmer has to pay for the 
chicklets and their feed many months in advance before they start 
producing any revenues in the form of meat or eggs. The fruit orchard 
needs to seed and grow the plants well in advance before the first 
fruits can be sold. The baker needs to pay for a new oven. Healthy food 
needs time — and money — to grow.

Many business owners seek to cover this revenue delay with loans or a 
line of credit from a bank. In addition to the higher rates for business 
loans, most banks are reluctant or unwilling to lend to small 
businesses. How can the underwriters know if the farmer turns out 
great-tasting carrots? How can they assess whether the community will 
support the expansion of the new restaurant? Indeed, these are difficult 
to figure out from a distance. However, the customers know how the food 
tastes. The community knows which eateries they cherish. Where banks 
hesitate to underwrite small food business, with Credibles, the 
community can do its own underwriting.

Why early participants like Credibles

Early pilots demonstrate that Credibles is an effective funding tool. 
Community members like that Credibles lowers the barrier for funding a 
food business. No big checks and complicated legal structures. If you 
eat, you can be an investor. As for the businesses, they can pay back 
the loan’s principal and interest with their products — something they 
grow or cook themselves. Does money get any slower than this?

Several Slow Money leaders and angel investors contributed to the seed 
funding for the Credibles platform. The service is rolled out and 
promoted in close collaboration with Slow Money chapters. Credibles 
pledged to donate 1 percent of the crowdfunding amounts to the Slow 
Money organization.

After early pilots, Credibles is opening its beta program in selected 
states, preparing for a national launch at Slow Money’s national 
gathering in April. If your business seeks funding, or if you are a fan 
of a food business you would like to fund for edible credits, let us 
know at https://credibles.org/