Specialty Food Magazine is the leading publication for retailers, manufacturers and foodservice professionals in the specialty food trade. It provides news, trends and business-building insights that help readers keep their businesses competitive.
FROM THE PUBLISHER Crowd-funding for Small Businesses
A
s if you hadn't personally felt the pinch or heard firsthand accounts, the Federal Reserve Bank of San Francisco states:
"Banks have pared their small business loan portfolios by over $47 billion since the pre-recession peak in 2007." While traditional sources of credit are only beginning to show renewed signs of life, alternative sources have stepped in to help small business get the
money it needs to continue to grow. Crowd-funding, a cooperative way of pooling money to support an activity, has
migrated from funding social causes to helping fund businesses. The basic idea is that small amounts of money are collected from a large number of people to fund a business. Here are two of note. Kickstarter (kickstarter.com), describing itself as "the world's largest funding platform for creative projects,"
allows a business to post a project that backers pledge to support purely for charity or in exchange for small gifts—blog mentions, product, etc.—from the poster. The poster sets a funding goal and date and does not receive the pledges unless the goal is achieved. A section for food reveals a small Fancy Food Show's worth of interesting products waiting to be funded. If you are drawn to the vicarious excitement of startups, make sure you have time to kill if you visit this site, as I got sucked in for an entire Sunday afternoon. One business, Quinn Popcorn in Boston, used Kickstarter when it needed additional capital to fund its first
production run of specialty microwave popcorn. The initial goal was to raise $10,000, but it eventually brought in almost $28,000 from 755 different backers—while picking up editorial mentions from The New York Times, Gour- met.com and Reuters. I asked Kristy Lewis, co-founder of Quinn Popcorn, about the Kickstarter experience. "Even if we hadn't met our goal, it's a huge community of backers that supports you," she says. "That was worth more than the money we raised." You can now find the company's products on store shelves at Whole Foods. A new, food-focused alternative from Slow Money is Credibles (slowmoney.clearbon.net), whose slogan, "If
you eat, you're an investor," says a lot about how it works: If you're a regular patron of a food business, you can buy credits based on what you'd expect to spend with them in the future, thereby providing the business with the money it needs to grow. Credibles is in beta but already has a restaurant in Brooklyn working to fund $50,000 in equipment and licenses and a gelateria in the Bay Area hoping to raise $250,000 to expand its production facility. With traditional corporate banking facing greater scrutiny in a post-recession era, crowd-funding offers a
creative—and satisfyingly subversive—alternative that is producing real results for small food businesses. |SFM| By Matt Tomas
HAVE A COMMENT? go to specialtyfood.com/mthomas/crowdfunding
Publisher, Specialty Food Magazine mthomas@nasft.org
facebook.com/specialtyfoodmedia
APRIL 2012
5