Crowdfunding for Food Startups



At Sunday’s well-attended Progressive Opportunities conference in Berkeley, the role of food could not be overstated as a focal point for reshaping our world. “If there’s anywhere people have really gotten the importance of local change, it’s the food movement,” said Elizabeth Ü, one of the most dynamic speakers at the event (which was produced by the Express). But this was more than a pep rally, rife with well-worn talking points and unrealistic utopian visions. The speakers at Progressive Opportunities were level-headed pragmatists, with attainable goals and inspiring stories. If anyone is going to upend the system, it’s these people.

I sat in on several of the day’s workshops, but Crowdfunding for Local Food Economies was particularly inspiring. The four-person discussion spanned two 45-minute sessions, and the hourglass still ran short before all the juicy ideas got their due. The topic was nominally crowdfunding, but it encompassed a larger exploration of different ways food entrepreneurs (farmers, restaurants, artisans, etc.) can secure capital.

The first speaker was Mary Rick of the San Francisco-based Hoop Fund, a middleman that connects small-scale lenders with Fair Trade farmers and businesses. Similar to the micro-lending platform Kiva, individuals make loans as small as $25 and investments are paid back in small, gradual increments. In lieu of interest, Hoop Fund lenders earn discounted products from the entrepreneurs, fostering a strong sense of connection between the involved parties. Rick said her company plans to do a lot of work in Oakland in the coming months.

Lawyer Jenny Kassan, who’s CEO of Cutting Edge Capital, advises entrepreneurs on the distinctions between different types of investments. She also helps navigate the tricky SEC restrictions aspiring food businesses have to contend with. “It’s ridiculous that we need to hire lawyers to solicit investments from our own community,” Kassan lamented. Her presentation reviewed funding models like Kiva and Kickstarter that avoid securities regulation, as well as co-ops like Mandela Foods and Arizmendi Bakery.


She also showcased Gather, the critically lauded restaurant that certainly needs no financial assistance at this point. But several years ago, when owner Ari Derfel was trying to raise $2 million to launch his business, he used a securities exemption that allows funding from up to 35 small, unaccredited sources. Not only did these non-bank investors give financial assistance, they also created a community support network that helped fill tables during Gather’s infancy.

Elizabeth Ü is the young firebrand director of Finance for Food, and is currently working on a book of the same name. Over the course of her short presentation she rocketed through a vast treasure trove of information. She started with strong words of caution for food businesses in need of capital. “When you are offered money, I can’t stress enough that you should know exactly what strings are attached,” she said. “You don’t want to be forced to sell out your values later” (see Niman Ranch, Ben and Jerry’s, etc.). Ü had many suggestions for funding sources, including small “friends and family” loans and peer-to-peer lending, but she warned against venture capital for most small food startups.

The last speaker was Arno Hesse, founding member of Slow Money and a trailblazer in the field of sustainable investment. Hesse just launched a crowdfunding platform for food businesses called Credibles. The tagline is “If you eat, you’re an investor” and it comes with a simple premise: Investments are returned in edible credits rather than cash. Some of Credible’s first entrepreneurs are Berkeley-based Gelateria Naia and Amber and Son Farm, a sweet little chicken farm in Sebastopol that I recently visited. Investors in these companies will get their dividends in gelato bars and pasture-raised eggs.

All four speakers showed not only that alternative food economies are within reach, but that we are well on our way.

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