Crowdfunding success story: preservative-free Righteous salad dressings and (inset) Luke Lang.
With people more eager than ever to find ways to boost their health and wellbeing, the opportunities for entrepreneurs who are launching new products that help us eat a more wholesome, natural, locally-produced diet are very exciting.
A rising number of small food businesses are turning to equity crowdfunding to raise the finance they need to get their ideas off the ground – bypassing banks and venture capitalists, which have reined in their lending – and those with a ‘healthy ethos’ are finding the approach extremely successful.
Equity crowdfunding involves pitching a business idea via an online platform to a base of registered investors – ordinary members of the public – who receive a share of the business in return for the money they commit.
Those food and drink businesses that opt to raise funds this way are often attracted by the simplicity of the approach, its accessibility to both investors and entrepreneurs, and the flexible process.
Building a collective
Crowdfunding tends to appeal to entrepreneurs who like the potential it offers to have a more direct, personal and collaborative relationship with investors, and build an engaged group of supporters who become evangelists for the product and brand. The investors who use crowdfunding sites, in turn, are drawn to companies that share their values, passions and priorities in life, and many are willing to get involved with the businesses they back in a way that goes beyond their financial stake.
Gem Misa – founder of Righteous, which makes an all-natural range of preservative free salad dressings – left her job as global brand manager for a large multinational company to realise her dream of creating a product she was passionate about. Because Righteous was so new and had no assets the banks turned down her loan applications, so she decided to pitch her idea on Crowdcube.
As well as raising the funds she would need to develop a marketing campaign and expand abroad. She hoped crowdfunding would help her connect with people who loved the business’s products and believed in its mission, and who would become ambassadors – helping her to spread the word. Righteous raised a total of £225,000 from two pitches, and its products are now sold in over 1,000 major UK supermarkets, as well as 400 stores in the US.
To successfully pitch an idea on a crowdfunding platform, a budding food or drink business needs to be based around a really great idea that inspires and excites potential investors.
Some young businesses are putting a healthier spin on an existing favourite – like AngelBerry, with its frozen yogurt, smoothie and shake franchises. It positions its products as a “guilt free” alternative to ice cream, and emphasises the fact that they are fat free, probiotic and made with natural ingredients. AngelBerry raised £200,000 earlier this year, and is now serving over 15,000 customers per week.
To claim a share of the cereal bar market, Wild Trail, which raised £168,000 in 2013, launched two ranges of premium wholegrain snack bars that have more nutrition “per bite” than any other. With a goal to “contribute to a happier, healthier way of life”, it sells these in stores, shops and delis across the UK.
Other young businesses look to capitalise on emerging trends by introducing something that is highly innovative.
Atlantic Kitchen makes ready-to-serve organic food that uses seaweed which grows wild on the Irish coast. Its co-founders Dawn Hourigan and Ruth Dronfield pitched for the funds they needed to launch a range of nutritious soups – including salt cod and salmon chowder with wild wakame seaweed, and green minestrone with wild sea spaghetti variants – which are presented in ‘meal pots’. They successfully raised £125,000 on Crowdcube.
A bigger purpose
As well as wanting a better way of life for themselves and their families, our research into the motivations of crowdfunding investors shows that supporting businesses and causes they feel are important for society is a big driver for investing.
Zero Carbon Food, of which Michel Roux, Jr. is a non-executive director, raised £581,000 this year to fund its plans to grow fresh leafy greens, herbs and micro-greens in redundant underground space in London using LED lights and a hydroponics system. Its mission is to benefit society and the environment as a whole by operating with a minimal carbon footprint, and reducing food miles by selling all of its produce “within the M25”.
Also with an ethos based around sustainability and promoting local produce is FarmDrop, a click-and-collect online marketplace that allows local fresh food producers to sell direct to consumers. By cutting out the middlemen, the organisation aims to bring producers a bigger margin, while at the same time saving customer’s money on their groceries. FarmDrop nearly doubled its crowdfunding target earlier this year, raising £748,000.
A blend of inspiration and perspiration
What all these innovative food businesses share is a passion for their product, a mission to help people live a healthier and more sustainable life, and a desire to surround themselves with people who share their enthusiasm and their values.
They also have something else in common, which has been absolutely vital to their success: they put a lot of groundwork into preparing a clear, comprehensive, compelling pitch, with solid financial forecasts and a strong business plan. Then they ‘got out there’ and told their networks (and their networks’ networks) about it to create momentum from the start. They diligently answered potential investors’ questions on Crowdcube’s forum, and regularly updated their followers with news – such as a piece of press coverage – to keep them engaged.
All of our research into what influences crowdfunding investors’ decisions points to the importance of being inspired and excited about who and what they’re investing in. Those entrepreneurs who can successfully get across their passion for food, their understanding of the market and their enthusiasm for the product they’ve created will be those that win over the crowd.
© FoodBev Media Ltd 2024