Crowdfunding 101 for Farms & Food-Based Businesses

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Information about Crowdfunding 101 for Farms & Food-Based Businesses
Finance

Published on February 26, 2014

Author: elizabethu

Source: slideshare.net

Description

What is crowdfunding, anyway? This umbrella term refers to a number of innovative fundraising techniques – online and otherwise – in which you raise small amounts of money from a large number of people, and many of these models can be helpful for farms and farm-based businesses. In this session we’ll cover the many forms of crowdfunding – including online fundraising platforms (such as Kickstarter and IndieGoGo), peer-to-peer lending, community supported pre-sales models (such as CSAs, subscription offerings and gift certificates), direct public offerings (DPOs), and more. Come away with a basic understanding of how the different forms of crowdfunding work, the laws that apply in each case, which crowdfunding opportunities might be a good fit for your own unique situation, and tips for success.

Presented by Elizabeth Ü at PASA's 23rd Annual Farming for the Future Conference: Letting Nature Lead. State College, PA. February 7, 2014

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   Small  dollars                                                                                                    Millions  $$$   Inexpensive                                                                                                          Expensive   Quick                                                                                                    Takes  more  Ame   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   Lower  credit  score  OK                                      Good  credit  required   www.financeforfood.com  

Peer-­‐to-­‐Peer  Lending  Plaorms   www.financeforfood.com  

Peer-­‐to-­‐peer  lending   www.financeforfood.com  

Kiva  Zip  Trustees  in  PA   www.financeforfood.com  

Online  Fundraising  Plaorms       www.financeforfood.com  

Online  Crowdfunding   Small  dollars                                                                                                    Millions  $$$   Inexpensive                                                                                                          Expensive   Quick                                                                                                    Takes  more  Ame   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   Lower  credit  score  OK                                      Good  credit  required   www.financeforfood.com  

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   www.financeforfood.com  

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     www.financeforfood.com  

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?   www.financeforfood.com  

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     www.financeforfood.com  

Design  your  reward  scheme   www.financeforfood.com  

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   www.financeforfood.com  

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   www.financeforfood.com  

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!   www.financeforfood.com  

Community  Supported  Models   www.financeforfood.com  

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     www.financeforfood.com  

www.financeforfood.com  

www.financeforfood.com  

Pre-­‐Selling  Online  –Rewards     •  Single  products   •  Product  packs   •  Product  line  subscripAons   •  CSA  memberships   www.financeforfood.com  

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   www.financeforfood.com  

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!   www.financeforfood.com  

How  Much  Can  You  Raise?   www.financeforfood.com  

How  Much  Can  You  Raise?   www.financeforfood.com  

Asking  the  Public  for  Loans   www.financeforfood.com  

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     www.financeforfood.com  

Direct  Public  Offerings   Small  dollars                                                                                                    Millions  $$$   Inexpensive                                                                                                          Expensive   Quick                                                                                                    Takes  more  Ame   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   Lower  credit  score  OK                                      Good  credit  required   www.financeforfood.com  

Direct  Public  Offerings  (DPOs)   •  Not  a  form  of  security;  it’s  a  way  for  a   company  to  offer  a  security   www.financeforfood.com  

Equity  Financing   Small  dollars                                                                                                    Millions  $$$   Inexpensive                                                                                                          Expensive   Quick                                                                                                    Takes  more  Ame   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   Lower  credit  score  OK                                      Good  credit  required   www.financeforfood.com  

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.   www.financeforfood.com  

Equity  InnovaAons   •  Non-­‐voAng  preferred   stock   •  Stock  doesn’t  appreciate   in  value  as  company  grows   •  Investors  receive  fixed   dividend   www.financeforfood.com  

Pop  Quiz!   What  are  the  3  Different  Types     of  Crowdfunding?   www.financeforfood.com  

Pop  Quiz!   What  are  the  3  Different  Types     of  Crowdfunding?   1.  SoliciAng  gigs   2.  Pre-­‐selling   3.  Selling  securiAes   www.financeforfood.com  

What  Worked  /   Didn’t  Work  for   You?     QuesAons?     elizabeth@   financeforfood.com   415.891.9194   @foodfinance  

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