Crowdfunding online — with sites like Kickstarter and Indiegogo — has proven to be a significant and potent source of seed capital for small, local, sustainable food and farm businesses.
For instance, last Summer 2013, Slow Money NYC was proud to work with Cayuga Pure Organics to raise over $87,000 on Indiegogo Campaign to help re-build their Barn and Beanery after sustaining devastating damage by fire that was only partially covered by insurance.
In the Fall 2013, Slow Money NYC followed up with a Crowdfunding Workshop, hosting a discussion by several major sites that help food companies raise capital. Our workshop participants, led by author Amy Cortese, identified five major types of capital available on crowdfunding websites: (1) Donations, (2) Rewards (3) Pre-Payment, (4) Debt Capital and (5) Equity Capital. By far, the most popular and successful crowdfunding sites provide a platform for seeking donations (sometimes combined with rewards, sometimes not). Least popular is equity capital because it is usually only available to “accredited investors.”
Quite surprisingly, for-profit companies have been some of the most major recipients of donations on such sites as Kickstarter and Indiegogo. The prevalence of for-profit companies seeking donations for new or experimental ventures demonstrates the extent of market failure in accessing suitable capital for small and startup business in the US. Crowdfunding donationsto enterprises have emerged as an innovative way for small business to raise low risk capital.
Crowdfunding via donation also aligns with the Slow Money movement. Slow Money NYC has explored ways for more people to move from conscious consumerism to impact investing in small, local sustainable food and farm business. To honor this impulse, Slow Money NYC adopted the motto “Everyone is an Investor in Food”.
In pursuit of this ideal, Slow Money NYC has encountered substantial challenges.
Few small businesses succeed, especially startups (See “Success Rates” chart). Thus, investment in small, local sustainable business bears a high risk of loss and low chance of return. Further, securities regulations (and the cost of compliance) make investment in small business largely out of reach for all but the most well-to-do, despite some reforms recently imposed by the JOBS Act of 2012.
Slow Money NYC has promoted the understanding that investing in our common sustainable future may require a downward adjustment of expectations in favor of low, slow or no return to the investors. “Slow Money” proposes a new hybrid investment philosophy that hovers somewhere between investment and philanthropy. Hence, crowdfunding donations to social and sustainable enterprise represents a robust “slow money” strategy that allows every person to become an active investor in the change they want to see in their food system.
Accordingly, Slow Money NYC has also created its own “channel” on Indiegogo and may act as a “trustee” for loans on KivaZip. If any entrepreneur would like to participate on either of these platforms, please contact us.
Slow Money NYC will also regularly feature crowdfunding campaigns of its friends, starting with this blog post! So, while we are working on our tans this Summer, we can help entrepreneurs expand their business through crowdfunding.
Here’s a sample of some ongoing crowdfunding for local food companies:
DONATION + REWARD
ROCKAWAY BREWING CO.
4 days to go! Seeking $30,000 for Canning Machinery. Raised $14,077.
56 days to go. Seeking $50,000 to build greenhouse. Raised $8525.
CHICKEN APPRENTICESHIP GARDEN
Seeking $1315. Raised $701. No Deadline Listed.
https://ioby.org/project/chicken-apprenticeship-workshops The goal of “Fort Hen”, our chicken coop at the Imani Garden, is to teach people how to raise their own hens in the city. Raising chickens in the city can reduce a person’s environmental footprint through a reduction in transportation of eggs and meat, a decrease in food waste sent to the landfill, decrease in energy and harmful chemicals used in producing their food and a decrease in gasoline use for motorized tillers and garden implements. And, of course, raising chickens is fun! We want to provide people with the knowledge and skills necessary to raise healthy, happy chickens.
Campaign On-going, indefinite. Featured at Slow Money NYC Meetup in 2013 and Pitch Competition in 2014. Meadow Butter: Pasture Enhanced, Sun Infused
Kriemhild Dairy Farms uses healthy grass fed milk for its sweet cream, barrel churned Meadow Butter. Our goals are to create exceptional food while improving the quality of our community and incorporating methods that reduce our impact on the environment.
We’re now ready to expand our grass fed product line! We’ve spent months planning and are working to secure significant funding for a farmstead creamery. With your commitment, we will be able to: (1) purchase the necessary equipment to expand our product line; (2) install renewable energy systems such as solar thermal; and (3) retrofit a drainage system which will allow us to turn waste water into irrigation water for the pasture. Use your edible credits to purchase butter now and our expanded product line coming soon.
HUDSON VALLEY SEED LIBRARY
Total Loan: $10,000. Raised $5,125. Commenced July 11, 2014. We are a seed company which has distinguished ourselves by choosing to grow our own seeds in the Northeast and commissioning artists to create original works for our eye-catching seed packs. Our unique business model, which includes an optional membership based seed library program, along with our art, has helped us grow quickly. Use of Funds: Now that we have a strong and enthusiastic online customer base and extensive wholesale accounts, we want to even out our cash flow by developing products, related to who we are and our customer’s needs, that can be sold during our typical “off season.”
RETURN ON CHANGE
IROQUOIS VALLEY FARMS
Featured at Slow Money National Gathering in Boulder Colorado, April 2013.