This year we assumed administrative management of the Michigan Good Food Fund, a statewide food financing collaborative designed to support food entrepreneurs sparking positive change in their communities.

This shift came at a significant moment. Partners had collectively infused $17 million in loans and grants and served 300 Michigan-based food businesses since the collaborative’s inception in 2015. Despite this initial success, Michigan Good Food Fund partners recognized the need to anchor its next phase of food investments in community voice and pivot to meet the most pressing needs facing local businesses.

As founding members, we asked ourselves: Are we meeting the needs of those we intend to serve? Are there gaps in our capital product offerings? What is the role of technical assistance? And ultimately, what does success look like for those on the ground leading the charge in their communities?

This reflection set off a year-long journey of listening sessions, working groups, and collaborative co-creation to re-ground this place-based initiative in the vision and priorities of the Michigan entrepreneurs it seeks to support.

As we closed 2021, a new Stakeholder Board was established to define the investment priorities for the Michigan Good Food Fund moving forward. The group sparked thinking about what the future can hold – including ways the collaborative can create greater impact for the state’s mission-led good food businesses with a focus on people who are most often overlooked by traditional investors, particularly people who have been marginalized due to their race, ethnicity and/or gender.

Read on for highlights from a conversation with Jean Chorazyczewski, one of Fair Food Network’s leads on behalf of the Michigan Good Food Fund, who shepherded this work on what we’ve learned, where we’re still learning, and the work ahead.

Why a Stakeholder Board?

JC: The purpose of our Stakeholder Board is to integrate community input and participation in our work. This group ensures our work going forward addresses—and is held accountable to—community-identified needs. The Stakeholder Board’s role is to co-create Michigan Good Food Fund’s vision of success, set investment policies and priorities, inform strategies, and maintain accountability of the collaborative’s partners to impacted beneficiaries. Stakeholder Board members also help connect the collaborative’s partners to community and entrepreneurial networks across Michigan, ensuring investments respond to community-identified needs.

What did you learn in your listening sessions?

JC: After stepping into administrative management of this initiative in early 2021, Fair Food Network started by deep-dive listening sessions with the collaborative’s existing partners. At the same time, our team organized working groups with a broader network of partners, including entrepreneurs. We wanted to learn their perspectives on three specific topics: Mission and metrics, community voice, and capital and technical assistance providers and offerings.

Our extended conversations raised successes and strengths as well as missteps, gaps, and challenges. It also led to some “ah-ha” moments and planted the seed for broader paradigm shifts. Across discussions, common themes included:

Addressing global issues, such as climate change and growing inequity, through food
Defining who Michigan Good Food Fund aims to serve and do better in identifying needs in different communities
Better connecting business assistance to real capital, especially for businesses owned and operated by people of color
Understanding the role of healthy food and how it’s defined in the collaborative moving forward
Expanding our reach to food entrepreneurs in every corner of the state

Fair Food Network compiled themes, insights, and recommendations for consideration by an independent Steering Committee. The Steering Committee then nominated candidates for the new Stakeholder Board to take these ideas and chart the course forward for the collaborative.

Who is included in the Stakeholder Board?

JC: Our collective intention was to re-ground this work in community voice by bringing together knowledgeable, representative voices from across Michigan and the food value chain. This meant farmers, local food entrepreneurs, grocers, and community leaders working alongside business assistance and capital providers to chart the work forward and have a shared voice in its work.

What strategic shifts is the Stakeholder Board making?

JC: The Stakeholder Board developed a new mission, investment policies, impact objectives, and portfolio performance targets that ushered in significant shifts.

This included a commitment to more diverse capital products and a shift from independent
business assistance and capital deployment to integrated and sustained investments. In addition, instead of prioritizing loan readiness and healthy food as primary filters, the collaborative recognized that some projects take years to come to fruition. Michigan Good Food Fund wants to partner with entrepreneurs to co-create outcomes and help them reach their future goals rather than invest solely in what’s happening today.

Finally, the Stakeholder Board elevated an “act local, think global” ethos that reframes local food financing as a tool to address some of the most pressing issues we face globally, including climate change and growing inequalities. We’ve continued to discuss its relevance in the collaborative’s work in 2022.

Fair Food Network serves as both an administrator of the initiative as well as a lender with its Fund. What role can a nonprofit Fund play in this network?

JC: As a social impact organization, Fair Food Network can focus on mission-aligned investments. This allows us to be more impact-oriented and less beholden to traditional financing structures.

In practice, this means much more creative and catalytic investments. Fair Food Network’s investment can take early action, providing a signaling investment so others can come behind us. We can take bets on “riskier” entrepreneurs when we feel the potential impact is high. We understand the food financing landscape and when there’s a sticking point, and we can work to unlock others’ capital – financing food businesses that may otherwise be declined. As a private impact fund, we’re also not locked into any single capital product. Our Fund aims to start with the entrepreneur’s needs and craft an integrated financial solution that fits their needs.

While our Fund is still growing, we hope this flexibility allows us to break new ground and be an additive partner to the broader community of food lenders and impact investors.

What’s a lesson learned that you’d like to share with others?

JC: Our team learned about the importance of patience in the process. It takes time to engage stakeholders and bring them up to speed on progress and, ultimately, let them decide where success lies. For a can-do organization like Fair Food Network, it was challenging to pause and spend the time it takes to truly listen and learn.

That said, it was well worth it. There is not only empowerment and enthusiasm in engaging the community, but also incredible ideas offered by those proximate to the problem. Our collaborative remains grateful to our partners, work groups, Steering Committee, and Stakeholder Board who invested their time and shared their knowledge to chart a new path forward for the Michigan Good Food Fund.

What would you elevate for a potential funder or investor?

JC: The Stakeholder Board has defined what success looks like and set our vision. A diverse network of partners, including representatives from across the state and various sectors, are now at the table. In addition, more than a dozen groups providing capital to food entrepreneurs in Michigan have signed onto this community-driven collaborative.

The Michigan Good Food Fund is a unique opportunity for funders and investors looking to deploy values-aligned capital, aligned with community-defined priorities and oversight, at scale.

Detroit Soul

By josh_loop | June 24, 2021

Highlight

Detroit Soul

Detroit entrepreneurs redefine soul food

Financing

$50,000 Collateral Initiative investment enabling financing from Detroit Development Fund

Detroit, Michigan

In 2010, Detroit residents Jerome Brown and Samuel Van Buren started a catering business that served homestyle cooking, but with healthful substitutes. “My childhood memories are family gatherings where we all got together around food. But we wanted to make it better for you. The same soulful flavors, just made with lighter options,” says Brown.

So, collard greens are cooked with smoked turkey, not ham hock. Lard is swapped out for vegetable oils. But the meals still pack a flavorful punch. Turns out, others agreed too. While working full-time jobs for nearly ten years, and with the support of their wives, Brown and Van Buren built a robust customer base for their catering and to-go meals through Detroit Soul. In 2015, they went from operating remotely to a brick-and-mortar location where customers could call in and pick up orders. By 2020, they conquered the traditional 50 percent failure rate for small businesses and saw sales soar.

“We wanted to be that neighborhood place, where people could turn to for a good nutritious meal, and not have to go to fast-food establishments, which are everywhere,” says Brown.

To make it more affordable, particularly during the pandemic, they started offering half portions that were priced well under $10, ideal for one person. “We really didn’t want someone to feel like it was out of their reach,” he adds.

But there was one thing that Brown and Van Buren had not been able to do: Provide a place for folks to sit, gather, and have a meal together. They wanted a sit-down restaurant, in addition to their carry-out spot.

“Many people have been asking us, ‘why not have a proper place where I can come and bring my family,’” Brown says. “So we started looking at how to finance it, knowing that restaurants are not an easy business.”

Their first venture had been self-funded for years. But to build out a second location, Detroit Soul needed additional financing. Brown and Van Buren were introduced to a local lender, Detroit Development Fund (DDF), as they looked for a loan.

As a nonprofit organization and CDFI, DDF was intrigued, but cautious of making another restaurant investment given the number of other restaurants in its portfolio and the challenges facing the food service industry with the pandemic. In addition, because DDF makes loans of up to $250,000, this one was erring on the larger size.

To help de-risk the investment, DDF worked with Fair Food Network as a like-minded partner in the Michigan Good Food Fund. Fair Food Network contributed $50,000 to Detroit Soul’s deal from its Fair Food Fund Collateral Initiative. In fact, it was during the pandemic when many small businesses, especially those led by Black and Brown entrepreneurs, were at risk of being washed away, that Fair Food Network launched the Collateral Initiative as a credit enhancement tool to help de-risk investments for other business lenders like DDF.

With this additional collateral in place, DDF was able to fund the entire expansion loan, which closed in July 2021. “Had it not been for the Michigan Good Food Fund partners and the Collateral Initiative this deal may have been much harder for us to pull together,” says Angelia Sharp, a senior loan officer at DDF, and a patron at Detroit Soul.

But the support was more than just funds to live out their dream of a dine-in restaurant, Brown says. “It’s been nothing but hands-on support. If I have a question pertaining to the business, I have someone to turn to for advice.”

Follow-on business assistance is part of the Collateral Initiative, too. After the loan, Fair Food Network helped the duo with other business needs, such as marketing and building out a robust website, to further support the business’ success.

As part of Fair Food Network’s business assistance, a new website and culturally relevant content were developed to speak to the rich history of Detroit and the food Detroit Soul serves up daily. With the right marketing support, Brown and VanBuren could focus on other aspects of opening a new location.

Even with the experience of a corporate career, Brown and Van Buren joke that navigating all the regulations in the food industry have been mind-boggling. They got their first taste of forms, paperwork, and compliance regs when the two scoped out a kitchen for Detroit Soul. Brown says, “I remember spending a full 8-hour day going from city office to city office, asking why I had been charged certain fees and what were all the inspections I needed to be in business. There needs to be a roadmap for these kinds of things. I persevered, but many would have given up.”

Working alongside Fair Food Network and other local partners, Detroit Soul now has funding secured and business support at their disposal. Brown and Van Buren expect to open their second location and launch their new website in summer 2022. They hope to repeat the success of Detroit Soul once again.

Posted in Investment Highlights

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