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
Ride the Storm: Navigating Through Unstable Periods / Katerina Rudko (Belka G...
Crowdfunding 101 for Farms & Food-Based Businesses
1. 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
3. Peer-‐to-‐Peer
Lending
Small
dollars
Millions
$$$
Inexpensive
Expensive
Quick
Takes
more
Ame
LiRle
paperwork
Lots
of
paperwork
Do
it
yourself
Requires
professional
help
Easy
to
manage
Care
and
feeding
over
Ame
Good
for
introverts
Takes
community
organizing
Lower
credit
score
OK
Good
credit
required
www.financeforfood.com
8. Online
Crowdfunding
Small
dollars
Millions
$$$
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
9. 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
10. 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
11. 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
12. 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
14. 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
15. 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
16. 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
18. 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
21. Pre-‐Selling
Online
–Rewards
• Single
products
• Product
packs
• Product
line
subscripAons
• CSA
memberships
www.financeforfood.com
22. 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
23. 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
27. 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
28. Direct
Public
Offerings
Small
dollars
Millions
$$$
Inexpensive
Expensive
Quick
Takes
more
Ame
LiRle
paperwork
Lots
of
paperwork
Do
it
yourself
Requires
professional
help
Easy
to
manage
Care
and
feeding
over
Ame
Good
for
introverts
Takes
community
organizing
Lower
credit
score
OK
Good
credit
required
www.financeforfood.com
29. Direct
Public
Offerings
(DPOs)
• Not
a
form
of
security;
it’s
a
way
for
a
company
to
offer
a
security
www.financeforfood.com
30. Equity
Financing
Small
dollars
Millions
$$$
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
31. 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
32. Equity
InnovaAons
• Non-‐voAng
preferred
stock
• Stock
doesn’t
appreciate
in
value
as
company
grows
• Investors
receive
fixed
dividend
www.financeforfood.com
33. Pop
Quiz!
What
are
the
3
Different
Types
of
Crowdfunding?
www.financeforfood.com
34. Pop
Quiz!
What
are
the
3
Different
Types
of
Crowdfunding?
1. SoliciAng
gigs
2. Pre-‐selling
3. Selling
securiAes
www.financeforfood.com
35. What
Worked
/
Didn’t
Work
for
You?
QuesAons?
elizabeth@
financeforfood.com
415.891.9194
@foodfinance