Crowdfunding Your Social Venture
There is something ironic about scheduling back to back coffee dates when you don’t actually drink coffee. I’d hoped that a “coffee date” would be an easy ask for my wannabe investors that would lead to another yes when at the end I asked them to invest in my fledgling food startup. Instead I ended up with a caffeine headache and the sinking feeling that perhaps I wasn’t cut out for this whole fundraising thing.
One of my advisors had warned me that by starting a consumer packaged good (CPG) company, I was signing up for a lifetime of fundraising. Unlike a tech company, where the costs often largely consist of personnel, physical products require a lot of upfront capital to produce and distribute.
There are many different ways to go about getting that money, and I’ve seen them across the spectrum of the food industry. One, go the Chobani route and invest a lot of your own money into purchasing a factory. Alternatively, take the Numi Tea approach and take on a large amount of debt early on. Or, keep it really lean, and live out of a van Clif Bar style. Finally, there’s the more common approach of raising a bunch of money from angel investors, a la Honest Tea.
My co-founders and I decided to take the Clif Bar approach at first, keeping our day jobs and testing out our moringa products at farmers markets on the weekends. We soon discovered that we couldn’t keep up with demand — spending all Saturday producing Kuli Kuli Moringa Bars, all Sunday selling them and then going back to our “real” jobs Monday morning simply wasn’t scalable.
Thankfully, these days there is a fifth financing option, crowdfunding.
For Kuli Kuli, it didn’t make sense to seek investment or a loan when all we had was an idea and a few months of consumer testing data. The food market is extremely competitive. No investor or bank would put their money behind a totally unproven new superfood product founded by a bunch of twenty-somethings.
But we knew we had a story. And crowds love stories.
We put together a crowdfunding campaign on Indiegogo explaining how I began working with moringa in the Peace Corps and then started selling it in the US to support women in West Africa.
At the last minute a friend convinced us to change our goal from $20,000 to $50,000. I stayed up all night worrying we wouldn’t hit our goal. I needn’t have worried; we raised $24,000 in 24 hours.
At the end, we realized that we hadn’t just raised $53,000. We had evangelized 800 new customers who cheered as we moved from a kitchen to a factory and delivered their Kuli Kuli Moringa Superfood Bars.
Nine months later, when our bank account dipped dangerously close to zero as we struggled to keep up with demand, we again turned to the crowd. Over two hundred people pitched in for a 1-year, zero-interest, $5,000 loan through Kiva.
We were now in over 50 stores across Northern California and were doing increasingly well online. But the little capital we had was tied up in manufacturing, and so we still weren’t able to pay ourselves. We’d kept our business as lean as possible but couldn’t stay that way forever.
This was where the coffee dates came in. We had decided to go the traditional route, raising money from angel investors. But I was getting nowhere. The combination of being young, female and in the food industry meant that I got a lot of “that’s a cute idea.” In case you were wondering, people don’t put thousands of dollars into “cute ideas.”
And then it struck me that perhaps I was doing something wrong. I’m not terribly good at being assertive. My voice naturally goes up at the end of my sentences. I have trouble convincing investors that I’m going to make them millions because I honestly have no idea what’s going to happen in five years and I’m a bad liar. In other words, I have many characteristics associated with being a woman.
But I’m really good at building movements. So I took the few investors who’d expressed interest in us and convinced them to help us kick off a crowdfunding equity round with an amazing platform called Agfunder.
In typical crowdfunding fashion, the majority of our money came in on the first day and the last day. I finally had a ticking time bomb in the form of an all-or-nothing crowdfunding campaign to convince investors that they needed to make a decision before the deadline.
At the same time, we found out that we were a finalist in the $25,000 Ledbury Launch Fund competition. The winner was to be determined by the crowd.
The crowd came through on both fronts. In less than two weeks, we raised over $300,000. Better yet, we now had literally thousands of people who felt like they had a stake in our company, whether they voted for us through Ledbury or invested $25,000 through Agfunder.
Over the past few years, I’ve seen the impact that crowdfunding can have on social enterprises like Kuli Kuli. From the launch of amazing companies like GoldieBlox and Soccket on Kickstarter to Kite Patch and Who Gives a Crap on Indiegogo, I’m confident that crowdfunding is enabling a whole new generation a social entrepreneurs like myself to live out our dreams to make the world a better place. Better yet, new data shows that crowdfunding is particularly favorable to women.