How Melt Organic Started Their Business
Founded in 2011, Rich & Creamy Melt® Organic is a line of all-natural buttery spreads for butter lovers seeking a healthier alternative. Available in original and honey flavors, Melt is the only buttery spread of its kind made from a blend of the healthiest fruit- and plant-based organic oils: virgin coconut, flaxseed, hi-oleic sunflower, palm fruit, and canola. Unlike other coconut oil based products, Melt spreads, sizzles, drizzles, sautés, bakes and melts just like butter, but with half the saturated fat and fewer calories. Each variety of Melt is certified organic, kosher and made with eco-social and Fair Trade ingredients (its virgin coconut oil is certified Fair for Life Fair Trade), while also trans-fat free, gluten free, and soy free.
In May 2012, Prosperity Organics, Melt's parent company, was in the middle of its third series funding. Melt's unique blend of healthy oils and great natural taste differentiated it from other natural spreads on the market. With the proliferation of gluten-free, Paleo and naturally low glycemic diets Melt owned its "Good Fats" moniker and was taking off. In addition to regional natural chains and recent distribution agreements with Jewel-Osco, Wegmens and The Fresh Market, Melt signed a September 2012 national distribution agreement with the number one national natural food chain, Whole Foods Markets.
The goal of the funding was to facilitate additional distribution expansion nationally. Led by angel investors in Idaho, Melt had already raised half of their $1 million goal, but had reached a raising plateau despite having another $200,000 soft-circled.
What is Crowdfuning and how it Worked for Melt Organics
At the end of May, Prosperity Organics CEO Meg Carlson approached CircleUp - a new equity-based crowdfunding platform that supports direct equity investments from individual investors into privately held consumer and retail companies. CircleUp accredited investors find free access to select private investments, easy tools to identify and research companies, as well as online transaction capability to make investments.
In an effort to broaden its reach, Melt became one of CircleUp's first consumer product investment opportunities, and was able to open the crowdfunding round in a record time of two weeks.
What You Need to Know to Crowdfund Your Food Business
Building a personal connection is critical. Melt recognized that it still needed to build a personal connection; the method and medium (video/phone conferencing, etc.) available on a crowdfunding site would be different. Investors that came shared that passion. Melt saw increased conversion from people they talked to at the Summer Fancy Food Show because they could direct them to CircleUp and make the investment process easy.
Leverage your own network in conjunction with a crowdfunder . CircleUp is great for finding new, value-added investors. But it can also help pull together investors that you already know and were sitting on the fence. Not all sites are the same. Donation or rewards-based sites do very few little with consumer products (<5%) and the raises are small (~$10K). When exploring equity-based crowdfunding sites make sure you pick a site that has a value-added community and has done deals that look like yours.
Extra Value Added Services . CircleUp partnered with an independent, third-party marketing research firm that conducted a consumer vetting study of Melt. The research turned out to be extremely valuable and provided key insights. This type of research study as a standalone might have otherwise cost Melt $10-15K.
Melt Received Funding in Eight Weeks
Within a short eight week period, Prosperity Organics was able to close their round of funding. The combination of CircleUp and the Whole Foods Market distribution announcement pushed the round to close, reaching the company's goal.
"The CircleUp crowdfunding experience sends a positive signal about our brand," said Carlson. "Raising money for an emerging growth consumer product company is time consuming. Having Prosperity Organics approved for their platform and securing commitment from new investors in a matter of weeks is extremely gratifying."