Raising capital for small food business is a headache for a foodpreneurs… a main reason Why Food Entrepreneurs Fail. Even larger brands, such as Melt Organics raised $1MM via an Equity Crowdfunding Platform.
I advise my clients crowdfunding is a solid alternative to conventional bank financing. And don’t consider and SBA Loan unless it is your only resort… they want to collateralize (create a lien) on your house and other assets!
Ryan Caldbeck… founder of CircleUp, worked in consumer products private equity and recognized that consumer companies with revenues less than $10 Million were not “fundable”.
A recent crowdfunding success story is Eyenalyze, founded by Michael J. Rasmussen, CPA. Michael is not a foodie but works with independent restaurants exclusively and recognized they had a problem and he had the solution.
Eyenalyze Automates Data Collection and Reporting for Restaurant Owners.
If your are an independent restaurant you are competing with the large multi unit chains like Panera Bread, Chilis… you know you competition. Those guys have an army of computer experts that create systems for the restaurant manage to know key metrics.. daily… and provide a way to make adjustments daily if necessary.
So Eyenalyze created a dashboard for all of you independent restaurants to review Net Sales, Gross Profits, Food Costs, Allocation of Cost of Goods Sold, Sales Analysis of Categories, and Fixed & Labor Costs. It pulls your labor costs as well as food costs directly from your suppliers.
It then integrates that data a simple, real-time profit reports on any web-enabled device. Independent restaurant owners are on the go so Eyenalyze works with your iPad and smartphone… no need to be stuck in the office. And it is presented as actionable information in IN REAL-TIME!
Is Equity Crowdfunding Right for Your Food Business?
Michael is using Equitynet.com, a new crowdfunding platform that takes advantage of Title II of the JOBS Act that lifts the ban on general solicitation of equity investments to and of accredited investors. So let’s chat with Michael on his crowdfunding campaign progress.
Why did you develop Eyenalyze?
My clients who are all restaurants, pushed him for better ways to deliver information faster about key restaurant metrics… We can deliver these in 24 hour turnaround vs up to 60 days with traditional methods
1) Studies indicate that over 50% of restaurants fail in the first three years. One main reason is operators do not have the tools to understand how to price the menu and manage food costs
2) Small to medium size restaurant operators do not have access to the data to track, monitor and analyze daily key profitability measures
3) Inaccurate and untimely information severely impacts profitability and sustain ability of restaurant operators.
Why was Crowdfunding “right” for Eyenalyze?
The reason for equity net… they had the best business plan that investors look at. It forces you to follow a structure. We used their business plan builder to raise friends and family capital first and then move to crowdfunding. Equitynet matches you to the industry and their software creates a valuation by pulling valuations from their sources as well as industry sources. If you match that with your business plan… your are good. They have a standardized format that investors are used to looking at and made us look professional.
Did you consider traditional capital before you went the Crowdfunding route?
We did and went down that route and it was slow going. The traditional started as an eight month journey of planning and courting investors. Securing a location professionally on the Web in the Crowdfunding space added credibility. We were also able to create a video and slide deck that promoted our technology partners in Los Angeles again adding credibility. People like to do business with people they know and trust so branding is vital. We secured a web to mobile app developer in Los Angeles recognized in the industry early and were able to promote our partnership via the crowdfunding platform.
Next Michael explains the crowdfunding experience… it’s different from traditional capital and how you may raise capital from your customers. Hey… your customers really “get” your product!