Need Funding To Start Or Grow Your Food Business?
Starting and growing a small artisan food business takes a lot of things. You need passion, you need drive, you need energy, you need good recipes, and you need a solid business plan or strategy. But the fact of the matter is that you also need money. It’d be great if you didn’t but, despite what those late night infomercials promise, pretty much every business is going to need money at one point or another. How much money varies depending on the size, scope, and type of food business you’re starting (or growing), but it can still be a major hurdle for many people to overcome. If you don’t have personal or ‘friends and family’ money to invest in you business and, given how hard it is to get a small business loan these days, what options are left for you?
‘Crowd funding’ (also known as ’crowdsourcing’) sites like Kickstarter and IndieGoGo is one option that just a few years ago wasn’t viable for most small food entrepreneurs. The concept behind these types of sites is that an entrepreneur or artist publically requests help in funding a specific project they’re working on. Backers or Funders, as the people who contribute to a specific project as known based on which site you use, also receive specific items or recognition based on their level of contribution to a specific project (as determined by the entrepreneur or artist). If, however, the total amount sought isn’t reached by a specific date and time then the Backers/Funders don’t pay anything and the entrepreneur or artist doesn’t receive any funding. It really is an all or nothing prospect.
This, of course, raising one big questions. Why would anyone help fund a project that they aren’t intimately involved with? The answer is a little fuzzy and there’s no hard psychological data I was able to find to back this up, but in talking with people who have contributed to such crowd funding projects in the past it usually has to do with the fact that they either somehow know the entrepreneur (or knows someone who knows someone who knows the entrepreneur) or they feel passionately about what the artist or entrepreneur is trying to achieve and want to help out. While most of us will probably not be able to make a huge endowment to a nonprofit or spend millions of dollars funding a new startup, these sites allow everyone to support artisans and artists. While $5 may not make a difference to your favorite Big Band, it certainly makes a difference to that high school garage band that’s trying to raise $3,500 to record their first CD.
You’ll notice I keep saying entrepreneurs and/or artists, right? While ‘crowd funding’ originally started as a way for artists to raise capital for their creative projects, small entrepreneurs soon caught on and there is now also an option for food business related projects on both Kickstarter and IndieGoGo. Browse through some of these food projects and you’ll see examples of some amazing entrepreneurs who are doing amazing things. Not to mention, you’ll also notice that these sites aren’t just for raising small sums of money. Recent food-related projects on both sites that reached their funding goals were seeking sums of $7,000, $25,000, and even $41,000. That’s some real money!
Are you intrigued? Check back tomorrow for some FAQs about how these types of sites work and then on Thursday we’ll talk to some food entrepreneurs who are using this idea to raise the money necessary to take their business to the next level.