Everyone has heard of crowdfunding. Now try Crowdfooding – the latest entrant into this busy marketplace for business financing. So why is the food industry so interested in this type of funding system?
You only have to take a look at the crowdfunding websites such as Crowdfunder and Indiegogo to see the number of food-related products and services being made available. Typical projects include launching restaurants, immersive dining, publishing specialist cookery books, a kitchen garden school, creating new products such as Elderbrook Cordial Tonics and community projects often involving allotments or community farms. Some are seeking equity finance, others promising rewards. It can be an ideal way of increasing awareness of a product or service, or simply putting on an event that might not otherwise be possible.
Great British Asparagus Feast
In early 2016, a decision was made to seek finance for a special asparagus themed event. “Our reasons for crowdfunding the Great British Asparagus Feast were two fold,” a spokesperson for British Asparagus Growers explains. “To celebrate the start of the British asparagus season and to create a quirky story around a much written about crop.
“The crowdfunding campaign ran for a month. It was promoted on British Asparagus’s social-media channels, as well as by ‘friends’ of the product and in the media. The aim was to raise £7,000 to cover the cost of putting on the feast. We made it and British asparagus was the first vegetable to crowdfund its own party! The Great Asparagus Feast was held on Thursday May 5 at Yurt Lush in Bristol.”
“It was a quirky veg-themed event backed entirely by the British public and saw top chefs including Josh Eggleton, Seldon Curry and Jamie Randall cook for 90 enthusiastic asparagus supporters. Each course featured a different grower’s asparagus and they gave a short talk about the darling of the spring veg box.
The feast worked on a reward basis; for a pledge of £75, people received a seat at the feast. Recognising that not everyone would be able to attend the venue, the organisers offered additional rewards such as a direct delivery of one of the first 100 bundles of British asparagus if they pledged a smaller amount.
The organisers felt they achieved their aims and that crowdfunding such an event worked extremely well: “The feast supported British growers at the start of a tricky season, and there was a lot of social media noise in the lead up and on the night itself,” says the spokesperson. “At one point #Asparafeast was trending on Twitter. We had media from national newspapers, industry press and regional titles in attendance as well as broadcast contacts and the feast was mentioned several times on local radio. Ninety seats were filled and we received great feedback from attendees.”
Hebridean Food Company
Another successful food project to receive major support from crowdfunding investors is the Hebridean Food Company. It secured its initial £60,000 Crowdcube fund and eventually raised over £90,000 from a total of 151 investors. The company was seeking to expand its range of vegetable-packed soups. “We took this route out of sheer frustration with traditional funding mechanisms,” says Douglas Stewart, founder and managing director of the company. “We were rejected by banks, but we thought we had a good idea, so we turned to a public platform to try to get the funding.”
Crowdfooding is born
Recognising an opportunity, a specialist food and drink crowdfunding platform has just launched. Crowdfooding is the vision of Alessio D’Antino. “The idea started when I was in San Francisco, building strategic partnerships with other business accelerators,” he says. “I realised that there was a huge food movement starting.
“The idea of building Crowdfooding started from understanding the struggles that most of the food entrepreneurs went through when it came to raising funds. Investors more used to investing in technology were becoming more inclined to invest in food, but didn’t really understand the dynamics of food businesses. This meant it was very hard for food entrepreneurs to identify suitable investors. Start-ups will play a crucial role in what the world will be eating in future because they are much faster at innovating. I returned to the UK because the food and drink sector here is a very vibrant scene and a collaborative one.”
Often small businesses and start ups see crowdfunding as a way of getting investment and realising their dream. “But it requires a lot of work; companies need to take time to engage with the crowd,” says D’Antino. “People are interested in investing and it is a very popular form of gaining investment among the younger market, as it is a way of engaging with customers and potential customers as well as investors. At Crowdfooding we are seeking to provide enterprises with a one stop shop for funding.”
It is this vision that is setting Crowdfooding apart from similar funding websites. “We do not put companies on the website automatically,” says D’Antino. “We vet and assess each company concept by a group of specialists, which includes business analysts and nutritionists. This enables us to advise on the best course of action – equity funding or a reward model. We want to make sure that companies and investors are totally aware of what they are doing and take all possible steps to do it right from the beginning.”
All potential companies seeking to raise funds on Crowdfooding begin the same way. The initial assessment from business specialists is followed by legal and financial due diligence. Once these assessments are complete, the companies can join the pre-interest section of the website. This is where they can put up information, and seek expressions of interest – but there is no commitment from either side. Only then does the project go live.
It is a system that is certainly appealing to food companies. There has been no advertising, only word of mouth – and the response has been high with some 360 applications from potential companies interested in using our site before it even went live earlier this month.