Three's Not a Crowd for Food Ventures
Do you have an inventive idea for starting (or expanding) a food business, but banks won't even take your calls in these credit-crunch times? Crowdfunding to the rescue.
With crowdfunding you put together a web-based pitch spelling out the funding you need for your food venture, how soon you need it, what you're going to do with the money once you have it and what perks your "backers" can expect to receive in exchange for helping you out. Funders pony up anywhere from $1 to several thousand dollars to support your campaign (although 70% of the donations are between $10 and $100).
Kickstarter and Indiegogo are the two largest, best-known crowdfunding websites and they work very similarly, except that Kickstarter only charges funders if the project's total goal is met. (Indiegogo offers an ongoing funding option.) They both fund many social and entrepreneurial projects outside of the food realm, but food is a keen area of interest. Nationwide, Kickstarter has hosted over 2,200 food-related funding requests and has raised over $9 million to support food projects.
In Arizona, Truck Farm, Noble Bread, Muñeca Mexicana, Bre's Petites Gourmet Treats and Granite Mountain Brewing Company have all run successful Kickstarter campaigns, raising from $1,250 to over $20,000 for their projects from more than 600 backers for an average donation of almost $75 each.
Raising funds through crowdfunding may not be as easy as it sounds. Nationally, only 40% of the food projects were successful on Kickstarter. We found 12 food-related projects from Arizona that did not meet their funding targets, including a brewery, a couple of food cart/truck ideas, a mushroom farm and even an Arizona-based truffle forest.
Kickstarter and Indiegogo both say that projects with videos are much more likely to get funded, as are those that receive a few initial donations quickly from friends and family to get the ball rolling.
Jason Raducha, the force behind the very successful Noble Bread funding request, offers this advice to would-be projects: "Be honest, and get all the friends you can to back you, whether it be a pledge or a 'like' on Facebook–it all helps. When my project ended I had tens of thousands of people seeing my project every day."
At press time, Arizona-based Ugly Cakes and Restoring Bee Keeping in the Southwest were both soliciting funds on Kickstarter with donations starting at $5 and $1 respectively. Nationally, over $400,000 in food projects were "live" on Kickstarter and Indiegogo had 247 active food-related funding requests. Check out the offers, and you just might be convinced to join the crowd.