Crowdfunding 101 for Farms & Food-Based Businesses

Crowdfunding 101: Understanding the Many Forms of

Fundraising from the Masses

Elizabeth Ü Founder & ExecuAve Director, Finance for Food

Author, Raising Dough: the Complete Guide to Financing a Socially Responsible Food Business

PASA’s Farming for the Future Conference February 7, 2014 in State College, PA

www.financeforfood.com

Peer-‐to-‐Peer Lending

Inexpensive Expensive

LiRle paperwork Lots of paperwork

Do it yourself Requires professional help

Easy to manage Care and feeding over Ame

Good for introverts Takes community organizing

Quick Takes more Ame

Lower credit score OK Good credit required


Small dollars Millions $$$

Peer-‐to-‐Peer Lending Pla\orms


Peer-‐to-‐peer lending


Kiva Zip Trustees in PA


Online Fundraising Pla\orms


Online Crowdfunding










Helpful to Have…


•  A retail business •  Lots of customers that know and love you •  A mailing list / e-‐newsleRer •  ConnecAons to tradiAonal media •  Social media savvy + lots of followers & “likes” •  Someone who can focus on campaign full Ame

Crowdfunding: 3 Different Types!


1. SoliciAng gigs 2. Pre-‐selling / Community Supported models 3. Selling securi'es to a large number of investors who expect a financial return

2 Crowdfunding Models


1.  All-‐or-‐Nothing (eg, Kickstarter) –  “Risk” –  Less expensive –  More moAvaAng

2.  Keep What You Raise –  Less risky –  PotenAal laziness –  Graveyard of sorry projects?

Design your reward scheme


EnAce Backers with Rewards


Primal Pastures Farm’s reward scheme: •  $5+ à “Thank You” •  $15-‐50+ à Name on Founder’s Wall, doodads •  $75+ à “Local Pack” (doodads + meat & eggs… or just the non-‐perishables)

•  $110+ à Apron •  $250+ à Year’s supply of chicken

Get CreaAve!


More Primal Pastures Farm rewards: •  $350+ à Doodads + farm tour •  $500+ à Doodads + Mentor Day •  $1200+ à Breakfast on the Farm •  $5000+ à Golden Egg: Own flock of chickens

Limited ediAon or first-‐come-‐first-‐save rewards

Gig Raising – CauAons


•  Easier for nonprofits or groups of farmers working together

•  Beware “crowdfunding faAgue” •  Gig Taxes: $14k max per person per year before giver owes taxes

•  Make sure you will make money!

Community Supported Models


Pre-‐Selling Online –Rewards


•  Single products •  Product packs •  Product line subscripAons •  CSA memberships

Pre-‐Selling Online – Reward Tips


•  Offer discounts to early backers •  Consider rewards relevant to your wholesale customers

•  Set appropriate pricing •  Take delivery costs into consideraAon

Pre-‐Selling Online – CauAons


•  Note your state’s laws around gig cerAficates

•  Cash flow consideraAons – Stagger start dates – Offer discount on total purchase instead of straight gig cerAficates

•  Make sure you will make money!

How Much Can You Raise?


Asking the Public for Loans


Direct Public Offerings










Direct Public Offerings (DPOs)


•  Not a form of security; it’s a way for a company to offer a security

Equity Financing










Equity Financing


•  You sell stock in your company. Investors become shareholders, and they want their money back at some point.

•  …they usually also want some control over how you run the company in the meanAme.

Equity InnovaAons


•  Non-‐voAng preferred stock

•  Stock doesn’t appreciate in value as company grows

•  Investors receive fixed dividend

Pop Quiz!


What are the 3 Different Types of Crowdfunding?

Pop Quiz!


What are the 3 Different Types of Crowdfunding? 1.  SoliciAng gigs 2.  Pre-‐selling 3.  Selling securiAes

What Worked / Didn’t Work for

You?

QuesAons?

elizabeth@ financeforfood.com

415.891.9194 @foodfinance

Crowdfunding 101 for Farms & Food-Based Businesses

Economy & Finance

Transcript of Crowdfunding 101 for Farms & Food-Based Businesses