We've all had good ideas. You scribble them down on the back of a napkin and promise yourself that one day you'll take the plunge, follow your dream and open that mobile food truck. A trip to the bank and the reality of a second mortgage is likely to throw cold water over all but the most ambitious of would-be entrepreneurs. But what if those dreams didn't have to be consigned to the financial scrap heap?
Many entrepreneurs have found the answer lies in short circuiting traditional capital investment and appealing directly to their audience through crowd-funding platforms, the most recognisable of which is undoubtedly Kickstarter. Its popularity has skyrocketed over the last year, with movie directors, celebrities and global brands all pitching their own projects, alongside the wealth of smaller-scale start-ups.
Originally known for supporting tech and digital projects, Kickstarter has proved to work particularly well when it comes to food projects. The US site shows a high overall success rate for food projects – running at around 41 percent, not far off the overall success rate of 44 percent. In fact, food project success rates are higher than those for film and video, technology and publishing start ups.
Crowd-funding has many advantages for start-ups, other than the purely financial. The nature of Kickstarter encourages entrepreneurs to pitch to their audience, to consider how to reward those who pledge. As such it creates a forum in which to test your product, potentially reducing any nasty surprises once you launch. It also creates word-of-mouth publicity through a ready built audience of advocates.
It's a principle embraced by BBQ sensation The Ribman, otherwise known as Mark Gevaux, who plies his trade in Brick Lane Market and Street Feast in Dalston. He smashed his original Kickstarter target of £10,000, raising an impressive £16,000 in two months, funding he needed to move premises and increase production of his notorious “Holy Fuck" hot sauce.
As part of the process he tested his customers' reactions to his sauces, encouraging them to help decide on flavours and name his sauces. By involving them every step of the way, he ensured a ready-made base of Ribman customers.
A KICKSTARTER CAMPAIGN IS THE MOST AMAZING MARKET RESEARCH YOU COULD DO
– Emilie Holmes, owner of Good & Proper Tea
Rewards for funding pledges ranged from free bottles of sauce and baseball caps, to a personal visit by Mark to cook ribs at a summer BBQ party for the biggest investor (£1,000 or more). When he reached his target, the hype generated by the Ribman's campaign was such that a massive party was thrown, with official backers enjoying free beers in recognition of their role in his success story.
For all its apparent simplicity, launching a food business on Kickstarter can be a nerve-wracking experience. “Before you launch, your project seems a totally academic exercise, but once you get that first pledge, things are finally happening for you. It was really frightening but also incredibly exhilarating," says food entrepreneur Emilie Holmes, the owner of Good & Proper Tea, a mobile tea van that tours the London markets.
Emilie had initially looked at traditional financing, but was discouraged by the realisation that she'd have to resign control of her vision if she was going to get it up and running.
“I went to the bank, but I was quoted a 19% stake across the board, as well as a commitment to sign over my family, my friends and the houses of my family and friends - the usual. So that was a non-starter."
Emilie, who comes from an advertising background, believes running a Kickstarter campaign helped her to form a strong relationship with her customer base.
“I feel an emotional attachment to every one of my investors, their names are on a giant poster behind me. Every time they come and have tea, they feel that connection. I felt like it wasn't about the money or what rewards they were getting, it was people really believing in my project and wanting to be part of it." All those who pledged over £20 arrive at Emilie's van with a filled out loyalty card, so it's easy for her to recognise them.
One piece of advice she has for potential entrepreneurs is to shoot a video. “People respond to your story, and that story is easiest to share with others in a video. Investors have to trust you and your vision when they pledge, and seeing your face makes it easier."
Emilie's tea business was one of the first projects to go live on Kickstarter in the UK, and she wasn't prepared for the wave of publicity and attention she received from people all eager to invest in her project, nor the vast amount of work involved in fulfilling rewards.
“I'm a perfectionist, so I was determined to give people hand-written thank you notes when I sent out their reward packages. It was a nice touch, but it took up almost every waking hour I had. It was a massive job."
She advises future Kickstarters to keep rewards simple. “One mistake I made was allowing everyone to choose the types of tea that would go into their rewards packages. It became a massive logistical task trying to reference each individual choice and pack them all by hand."
Crowdfunding is of course no guarantee of success.
Many projects fall by the wayside, victim to ill-thought-out strategies and dull social media campaigns. Huge amounts of work are necessary to make sure that investors are drawn to your project, engage with your story and want to become part of it.
Kate Hofman, one of the founders of South London urban farm GrowUp, stresses the importance of being disciplined. Her aquaponic farm project reached its target, she maintains, because of a carefully thought out business plan. She recommends spending at least six to eight weeks putting together your campaign. “Plan everything meticulously and don't try and get more money just for the sake of it."
Kate and her co-founder Tom Webster designed their fundraising strategy to make the most of their existing networks. “We targeted specific individuals and groups who we thought would be interested in supporting us, and also identified an off-line segment of potential funders to engage with. “With all our marketing, we aimed to be as honest, open and personal as possible. We wouldn't have run the Kickstarter campaign unless we were confident that we could meet or surpass our target. We treated everyone who pledged as a funder and kept them up to date through the Kickstarter platform."
The people we talked to acknowledge that Kickstarter isn't a magic portal to instant business success, and that planning is everything. How you introduce your product and engage with your audience is critical, they say. You're asking funders to go out on a limb for you so injecting some of your own personality into your campaign will encourage people to trust you. The feedback you receive can be vital to your business. “Ultimately, running a Kickstarter campaign is the most amazing market research you could ever hope to carry out for your product or business," says Emilie.
It's also worth remembering that food is a subjective area; if a project fails to reach its target there might be a bigger underlying reason. Perhaps the almond and kale chutney that was a big hit at last summer's street party simply doesn't have the appeal to become a commercial success.