crowdfunding in the kitchen - seattle chefs collaborative national sustainable food summit 2012
DESCRIPTION
Crowd-funding in the kitchen: non-traditional financing and funding for your food-related project Small business owners have found it difficult to access tradition financing from banks over the past few years. An increasing number of them, including chefs and value added producers, have turned toward crowd funding to put together the capital necessary to start or expand their businesses. From food trucks to fine dining, a variety of different models have been successfully employed. What’s worked? What’s flopped? We’ll discuss with our colleagues who have gotten help from the crowd to fund their projects. Whether by Kickstarter or pre-sale of discounted goods or gift cards, crowd funding builds on the familiar concept of Community Supported Agriculture (CSA) and takes it to the next level. Moderated by Gregory Heller, Seattle Chefs Collaborative. Presenters include Tim Crosby and Arno Hesse, both of Slow Money, chef Thierry Rautureau of Luc and Rover’s restaurants, and Jared Stoneberger of the Lark Cookbook Project.TRANSCRIPT
Crowd Funding In The Kitchen
Gregory Heller, Seattle Chefs CollaborativeJared Stoneberg, Lark CookbookThierry Rautureau, Rovers & Luc
Tim Crosby, SlowMoney NWArno Hesse, SlowMoney NorCal
HungrySeattle.comTwitter @HungrySeattle#NatlSum12
Monday, October 1, 12
Who’s In The Room?
• Producer?
• Restaurant?
• Chef?
Monday, October 1, 12
• Have you ever backed a project on:
• Kickstarter?
• Indie GoGo?
• Other Mechanism?
Who’s In The Room?
Monday, October 1, 12
Funding Sites
Borrowing Sites
Monday, October 1, 12
Chefs Collaborative National SummitOct 1, 2012
Tim CrosbyDirector, Slow Money NW
Food Investments
Monday, October 1, 12
Since 2009170 enterprises, $20 Million
14 Local Chapters
7 businesses secured investments of just under $4 million
Direct investments of loans, equity, lease-to-own equipment purchases
Business development and technical assistance
34 WA and OR based enterprises received business development / technical assistance, connections
Farmer Reserve Fund
Monday, October 1, 12
– A bank, insurance company, registered investment company, business development company, or small business investment company;
– An employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million;
– A charitable organization, corporation, or partnership with assets exceeding $5 million; – A director, executive officer, or general partner of the company selling the securities; – A business in which all the equity owners are accredited investors; – A natural person who has individual net worth, or joint net worth with the person’s spouse,
that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person;
– A natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
– A trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.
Source: www.sec.gov/answers/accred.htm
Who is an investor?• Accredited Investors
–Angels, VCs; Banks, Credit Unions, Foundations
Monday, October 1, 12
Who is an investor?• Non Accredited Investors
–Wall Street, Mutual Funds, Credit Unions, IRAs
–Emerging Community Capital efforts• Crowdfunding• Investment Clubs
–Regulated vehicle; pools funds• Local Investment Opportunity Networks
–Non-regulated; networks ‘friends’
–Customers
–Friends, Families (and Fools)
Monday, October 1, 12
What is an Investment?
Bootstrap Market
Credit Cards
Friends,Family CSA Pre-PayGifts,
GrantsPurchase,
Trade
Social Return (SROI)
Monday, October 1, 12
Capital Continuum
Bootstrap Market
Credit Cards
Friends,Family
Lower riskLower reward
Higher riskHigher reward
Debt SubDebt
Revenue/Royalty
ConvertibleDebt Equity
CSA Pre-PayGifts,Grants
Purchase,Trade
Social Return (SROI)
Financial Return (ROI)
Monday, October 1, 12
Capital Continuum
Bootstrap Market
Credit Cards
Friends,Family
Lower riskLower reward
Higher riskHigher reward
Debt SubDebt
Revenue/Royalty
ConvertibleDebt Equity
| Personal |
| Investment Clubs, LIONs |
CSA Pre-PayGifts,Grants
Purchase,Trade
| Customers |
| Accreds, Angels | | VCs |
Social Return (SROI)
Financial Return (ROI)
Monday, October 1, 12
Crowdfunding
Crowdfunding space
Credit Cards
Friends,Family CSA Pre-PayGifts,
GrantsPurchase,
Trade
Monday, October 1, 12
Crowdfunding Regulation
Jumpstart Our Business Startups Act (JOBS Act)6 bills in one act, main parts due next year
- Don’t hold your breath
Of Interest:1.Regulated crowdfunding
1. $10,000 or 10% of income per investor, whichever is less2.Raise number of shareholders before forced to go
public3.Advertise to solicit investors
- Due now
Monday, October 1, 12
Other Non-Bank OptionsDirect Public Offerings
–Small Company Offering Registration (SCOR)• All except Alabama (under consideration), Delaware, District of Columbia (has no securities laws), Florida, Hawaii, and Nebraska.
Monday, October 1, 12
Farmer Reserve Fund
Credit Union
Monday, October 1, 12
Farmer Reserve Fund
Credit Union
Risk
Reduced LeveragedDonation
SROI
Tech Assistance Program
20% default rate for first round
$10K deposit creates $50K loan(s)
Impact InvestorChef
Monday, October 1, 12
Direct Option
Credit Union
ChefRestaurant
Risk
Reduced
Monday, October 1, 12
Thierry Rautureau
• Funded Luc through pre-sale to ~220 customers
http://TheChefInTheHat.com
Twitter: @thechefinthehat
Monday, October 1, 12
Some Numbers2361 Projects
177 Live40% Success Rate
$9.64 Million Raised
Over 250 “Food” Projects(no specific stats available)
Monday, October 1, 12
All Projects
#8
$9.64 Million Successfully Raised for
Food Projects
Monday, October 1, 12
Successful Projects
>50% Of Successful Food Projects Raise between $1k
and $10k
#7
Monday, October 1, 12
Unsuccessful Projects
#9
The Ones That Fail, Fail
Big (<20% of
funding goal)
Monday, October 1, 12
Lark - Chef John Sundstrom
Monday, October 1, 12
Monday, October 1, 12
Monday, October 1, 12
Monday, October 1, 12
Monday, October 1, 12
Monday, October 1, 12
2
I was told there would be a path to
CROWDFUNDINGsomewhere around here
Monday, October 1, 12
Confidential © Clearbon 2012 3
Monday, October 1, 12
Confidential © Clearbon 2012 4
Monday, October 1, 12
Confidential © Clearbon 2012 5
Monday, October 1, 12
Confidential © Clearbon 2012 6
Monday, October 1, 12
Confidential © Clearbon 2012 7
Monday, October 1, 12
8
Monday, October 1, 12
Monday, October 1, 12
10
Monday, October 1, 12
Confidential © Clearbon 2012 11
Monday, October 1, 12
Confidential © Clearbon 2012 12
Monday, October 1, 12
Resources
• KickStarter.com Blog
• FinanceForFood.com forthcoming book: Raising Dough
• SlowMoney.org
Monday, October 1, 12
http://HungrySeattle.comTwitter @HungrySeattle
Monday, October 1, 12