How Chris Dodd's Bill Might Restrict Start-up Funding

I'm sure you've heard by now about credit default swaps and how hedge funds like Magnatar made a killing. They worked with banks to pool risky assets and then insured the riskiest (and cheapest) classes in each portfolio. At the same time, they took out big bets against the whole portfolio. Essentially, they were partnering with banks to create assets they knew to be extremely volatile with the expectation that when they failed, they would make billions. The bankers, in turn, sold the risky assets to ill-informed clients and collected millions in service fees (great piece at This American Life).

So now there is a battle royale going on over  a piece of legislation called The Restoring American Financial Stability Act of 2010. The Republican senate officially blocked the measure today, but it is widely speculated that the reform will be passed by the senate as early as next week. While I favor increased oversight of derivatives markets, I am concerned about how other parts of the reform bill will affect small business. In particular, Chris Dodd's bill could impair the ability of entrepreneurs to secure funding from angel investors in a few key ways:

1. "It would require  that start-ups seeking angel investments file with the Securities and Exchange Commission and endure a 120-day review."
2. It would "remove a federal pre-emption that prevents start-ups and investors from being subject to 50 different state regulators." 
3. It changes the definition of accredited investors from $1M to $2.3M in net worth or $250K to $450K in annual income. This would exclude a great number of investors from being qualified to participate in small equity deals. 

Angel investors have a significant positive impact our our nation's economy. "In 2008, angels invested some $19B in more than 55,000 companies. On April 21, the Angel Capital Association submitted two amendments to Congressman Dodd and he is reportedly taking the issues they raise seriously.

Please send a message to Chris Dodd's office in support of small business growth in America.

Study shows that farmworkers hold the most common 'green collar' job

I posted this earlier today at www.cascadeharvest.org.

Former White House advisor, Van Jones, popularized the phrase 'green collar jobs'. His vision is to bring job training and employment opportunities to urban America through a national focus on energy retrofits. While Van's message is spot on, many of my colleagues have lamented that agriculture doesn't get enough recognition for the green collar jobs it creates.

Last month, the Washington State Employment Security Department reported that the "most common green occupation in 2009 was agricultural workers." The agriculture industry creates more than 12,000 green jobs annually, the second largest source of green jobs in WA state (yes...behind energy efficiency in the construction industry). Those 12,000 positions represent 11% of all agricultural employment in WA state and are mostly generated by companies whose work is “preventing and reducing environmental pollution.”  

As projects such as Farm Power NW and the Wild Horse Wind Farm continue to challenge our conception of what food and energy production look like and as the city of Seattle continues to herald 2010 as the Year of Urban Agrulture, let's continue to look to farms as a source of green jobs.  

Northwest Farm Credit Services - A quick look at the Young and Beginning Producer Grant program

I posted this earlier today at Cascade Harvest Coalition.

One of the primary barriers to growth for small farmers and other food entrepreneurs is access to capital. Appropriate financing allows entrepreneurs to invent new technologies, deploy innovative sales strategies, attract new investment, and ford occasional economic valleys. Small businesses in WA state have a lot of advantages including nationally renowned community development organizations, a supportive Department of Financial Institutions, and a strong angel investor community.

In an effort to synthesize the leading programs as well as highlight some more creative tools and strategies from around the nation, I will begin posting regular blog shorts, highlighting one or two programs or opportunities at a time. We look forward to your participation and feedback.

This fall I spoke with David Poor of Northwest Farm Credit Services about their Young and Beginning Producer Grant. The program was established to support young and beginning farmers who would otherwise have a hard time accessing financing. ‘Beginning’ is a bit of a misnomer as eligible farmers must have several (but fewer than 10) years of experience in farm management. Loans can range in amount from $2.5K to 200K and 2009 interest rates were prime rate plus 2%. Ancillary benefits include mentorship and a $500 stipend for continuing education (including the purchase of a computer).