3c hapter - Index of

Slow Money 155
that overrode that impulse. His operation, Milk Thistle Farm in
New York’s Hudson Valley, was exactly the sort of enterprise that
Slow Money aims to support—a local, sustainable, growing dairy.
By now, Hesse was under the protective watch of John Friedman,
a chain- smoking lawyer who had recently moved with his wife to
the Hudson Valley, leaving behind the cramped studio they had
long shared in Greenwich Village.
Freidman had read about how Hesse was trying to raise money
from customers and “potentially getting into trouble.” In return
for learning the dairy business, and perhaps some fresh- raised
pork, Friedman offered to help Hesse raise money for a new processing
plant and keep him on the right side of the law. “Most
farmers don’t have the fi rst clue about how to structure a deal, and
can’t afford someone like John,” said a clearly grateful Hesse.
Freidman’s fi rst order of business had been to put together an
offering memorandum so that Milk Thistle’s informal plea to customers
for funding complied with securities laws (the offering was
permissible under Reg D, rule 504, if they registered with New York
State, says Friedman). But soon it became clear that, to raise the
$850,000 Hesse required, another approach was needed. So here
they were at Slow Money, like everyone else, in search of solutions.
Milk Thistle was in the sweet spot of the fast- growing market
for high- end, grass- fed organic milk. It is, by nature, a fragmented
market made up of tiny dairies (large brands like Horizon, owned
by Dean Foods, are technically organic but use industrial- scale practices).
Milk Thistle had been growing at 100 percent a year and was
generating profi ts without the benefi t of a large operation to spread
costs over. If Hesse could just get funding for a new plant and perhaps
a bigger farm, he could take Milk Thistle to the next level.
Hesse and Friedman talked to professional investors and private
equity types in Santa Fe and at a series of similar conferences
for so- called patient capital. At one event, they met a potential
private equity investor in an elevator—which tickled Hesse since
Friedman had tutored him on the importance of the short but
pithy sales pitch known as the “elevator pitch.” After drawn out
negotiations, however, the deal fell through. Meanwhile, Hesse
was spending so much time away from the farm trying to raise
money that his employees teased him that he could no longer