March 21, 2016

Crowdfunding & Your Food Business (Podcast)

Copy of Small Food Business Podcast - Pattock

For many entrepreneurs, crowd funding seems like a great way to raise low-cost capital for their business.  While it is, without a doubt, a powerful option for small businesses, as Kathleen Minogue of Crowdfund Better explains, it takes more than putting a video and some rewards online to be successful.


Jennifer:Welcome. This is Jennifer Lewis from Small Food Business with a Small Food Biz podcast.


kathleen minogueToday, we’re talking with Kathleen Minogue. She is the founder of Crowdfund Better. She’s a crowdfunding educator and speaker and an alternative funding consultant. Her company, Crowdfund Better, provides crowdfunding assessments, strategic planning, marketing training, and hands-on marketing support to assist project creators in designing and implementing a campaign plan based and poised for success. The Crowdfund Better team has worked alongside project creators on highly successful campaigns, on platforms, ranging from Kickstarter and Indiegogo to more niche things that some of you may not be aware of such as Seed & Spark, Barnraiser, Fund Dreamer, and Hatchfund. Kathleen is a member of the Crowdfunding Professional Association and has been invited to speak at venues including General Assembly, Impact Hub, Pepperdine University, the Directors Guild of America, and the Small Business Administration.


Thank you, Kathleen, for joining us today. Really appreciate you taking the time to share a little bit of your expertise with us, so thank you.


Kathleen:Thank you, Jennifer. Thank you for inviting me because I am so excited to share this information with small food businesses.


Jennifer:I touched a little bit briefly on your background, but I’d love to hear from you how you became interested in crowdfunding as a tool that small businesses can use to raise capital, and just a little bit about your experiences thus far.


Kathleen:Well, actually, I would say I’ve been preparing for this a little bit my whole life. My background is in education. I’ve also worked in nonprofits. I also spent a few years working at JP Morgan in their investment bank and I was in a space where I was between the investment bank and venture capital investors. What I saw at that time was how limited access to capital was, how small the network was that was getting access.


In 2012 when a friend of mine, a filmmaker here in LA, said she wanted me to produce her film, what she really wanted was some help raising funds. Crowdfunding was just beginning to light up, the Pebble Watch had just raised $10 million, so it was no longer this little thing that the people over in the tech community were doing, and we tried it; we gave it a whirl. We spent three months prepping, and launched the campaign and were successful, and made the film and went off to festivals. She went off to continue her career as a film director, and I caught the crowdfunding bug because as part of my background I’m also an artist and a creative, and what I saw was this was an incredible opportunity for people who were in my community, creatives and small business owners and others, who really don’t have access to capital often until they’ve already been two years in the business, when they qualified for loans, to have that beginning funding, which can make all the difference in terms of their ability to make their ideas real or to continue to grow them past that first year.


Jennifer:Just to back up for a second, you talked about while you were putting this first campaign together, that it took about three months. Can you talk a little bit about that because a lot of times I’ll talk to food entrepreneurs who get really excited about the idea of crowdfunding but they want to go off and start it tomorrow, and you’re talking three months. What have you found in your experience ultimately ends up working for folks?


Kathleen:Well, I’m glad you asked that question because it is probably the biggest myth of crowdfunding, and I’m happy to dispel it right here. It’s a little bit like Field of Dreams. There’s this assumption that if you build it, they will come. People don’t come to crowdfunding platforms looking for campaigns to back, you have to bring your audience, and so if you just post your campaign and are expecting people to back your campaign and find you, you’re going to be amongst … and the success rate really is this. People who don’t prepare, they often don’t raise more than 10% of their goal. I always tell my clients it’s three to 12 months of prep …




Kathleen:… and that depends on where you are when you start, how much funding you want to raise, and more importantly, what are your long-term goals for what you want this campaign to do for your business because often people think funding with crowdfunding, and I call my company Crowdfund Better because there are also other things, other resources and other tools, that can be gathered during the crowdfunding process if you enter the process strategically and really think about what do I want this to do for me in a year, what do I want this to do for me in three years, when I look back in 10 years what do I want to say that that crowdfunding campaign helped me do faster or more effectively, and so it is really the successes in preparation.


I know that that’s intimidating for many small businesses because they’re already dancing as fast as they can, but it’s often things that a small business would need to do anyway. You need to understand your market. You need to find your audience. You need to figure out your pricing. These are not things that are just crowdfunding related, they are things that will help in the success of your business for the long term.


Jennifer:I love the point that you bring up. It’s funny because I advocate in business planning that you should not just be planning for putting out the immediate fire, you should be planning that one, three, five, 10 years down the road. To be totally frank, I hadn’t actually thought about crowdfunding in that way that you just mentioned, which is, “Okay, beyond just the need for these funds, what else are we trying to achieve both in the short term and the long term?” Now, as you mentioned it, my head is exploding thinking, “Oh my goodness, the opportunities that that presents to food entrepreneurs in a way to position themselves in the crowdfunding campaign to be successful not just tomorrow but down the road.”


Kathleen:I say that crowdfunding is a unifying event for your business and a motivating event for your customer. Because there’s a time clock, it changes your focus. You know I’m going to have 30 days to raise these funds, so I have to get as many eyes as I can to my campaign in those 30 days. It’s also public. It’s an act of fundraising that people can watch, and so as that you can be very successful in creating a picture of your business that you want others to see; we have a great team, we have a great product, we have a great story, we know how to interact with the customer. All of these things are there on the internet for a potential customer or I’ll even say a potential investor to see.


When I talk with clients, I say, “Well, what else do you want from this?” Oftentimes, a client says, “Well, I need to raise $100,000.” That’s actually not that easy. A hundred thousand dollars is a really steep hill to climb. Most successful campaigns are for $10,000 or less. As you raise your goal over $10,000, it’s a brisk walk up the hill to $10,000, but after $10,000 it starts to be a steep climb, and as you hit those larger numbers it’s like bouldering. Maybe you can’t get the whole way with crowdfunding, but you can bring other resources in.


I often talk with individuals who say, “Well, someone in my network, they’ve said they would investment in my company, but they’re dragging their feet, they’re not taking action.” I said, “Well, what if you say I’m going to raise $20,000 via crowdfunding, and when I do will you put the other $20,000 in that you promised me.”


Jennifer:That point that you just mentioned is fantastic, about encouraging potential investors who might be in your friends and family network to make an investment in your business by proof of concept through crowdfunding, that what you’re doing has mass appeal beyond just your friends and the family. Again, I’ll be honest, that’s not something that I had thought about doing or leveraging crowdfunding in that way in addition to your friends and family, so I really appreciate you sharing that. That’s fantastic insight.


Kathleen:When I talk with clients about Crowdfunding Better, there’s a list of things that crowdfunding brings, so I’ll just list them off, some things to think about when you’re trying to decide if it’s worth it because I will not make any bones about the fact that it’s hard work. If you’re going to do it, what else can you get. You can get that proof of concept. You have a new product, and there’s one thing for you to say, “Hey, I have this great idea,” and it’s another thing to say, “Hey, I have this great idea and 500 people already pre-bought the product from me before I’ve even made it. It’s such a good idea.” That gives you that market validation. There is a market for what I’m doing. Just as an entrepreneur, isn’t it better to know before you spend all of this, invest all of this capital into building a business, that there is a market for it, that you’re not going to have boxes and boxes of product that never sell.


What that also provides when you crowdfund is the ability to interact with a customer before you go into production so that you can find out what they like. It becomes a back-and-forth communication where you can show them your branding, your packaging, how are you selling it, how are you pricing it, and you can get that information. Just to give an example, there’s a multi-million company, they’re in the tech space, but they didn’t need crowdfunding dollars. They said in an interview, and this came home for me, that they tried all this market testing and all of these things, and they said that crowdfunding was the single most effective way to get customer feedback prior to manufacturing that they had found, and so they did it entirely for customer feedback …




Kathleen:… to get the customer in that discussion.


As we just talked about, it’s also incredible leverage for investors. If you are looking to get a loan, one of the pieces of that loan is proving a market, and the crowdfunding campaign proves a market for you. It’s also great for partnerships. There might be another business that you’ve been trying to get to work in partnership with you, but you’re new, you’re green, and they’re not sure if you’re going to deliver on what you promise, and so going through the crowdfunding campaign, and marketing, and manufacturing, and delivering that product, they look at you and they see you in a different light.


Jennifer:With regards to that word manufacturing, one of the things I was wondering is about, because we’re mainly talking to small food producers here, some of whom may have a shelf-stable product that can easily be shipped, but I know also having looked at crowdfunding platforms that it might be the cookie lady from Des Moines, how does the perishability of the food products, does it make it harder for those businesses to capture a nationwide audience because they don’t have a Pebble Watch that can be easily shipped to donors. I guess I was wondering do you have any recommendations for food businesses such as food trucks, bakeries, or other perishable food producers who are thinking about perhaps looking at crowdfunding as a means for raising capital?


Kathleen:Well, I do, but before I do I would just want to say that the first time you crowdfund, that initial go, it really is about leveraging your own network first. There’s a lot of people out there who say that you can post it on social media and that will do it for your campaign, and the statistics are that the conversion rate on social media to people you don’t know is one percent or less. I just wanted to put that picture out there because really your local network, especially if you’re a food producer, is going to be your primary audience.


Now, if you want to stretch beyond that, that’s part of that three to 12 months of preparation, you take some time and you look at, it’s not about casting a huge wide net. Big corporations have millions of dollars to spend on marketing, and they can allow for people to fall through the holes in the net. For smaller businesses, it’s about a fishing pole with a really strategic placement of that sparkly lure in exactly the market that is looking for you. It’s not about convincing people to back your campaign, it’s about finding the people who are waiting to back your campaign. My daughter is a gluten-free, dairy-free kid, and if you have a product that appeals to that audience, where can you put yourself on the internet where you’re going to have people waiting for the solution, if your product fits that that you’ve provided.


Outside of that, what I would say is think intellectual property. Maybe you can’t deliver the actual food product across the country without it having an incredible cost for packaging and what you’ll need to keep it cold. That can be prohibitive. It can be as expensive as the product itself. So, thinking about it intellectual. As a food producer, you are a bevy of [inaudible] food, about culture. There’s so much that can be around [inaudible] food business; working with others in partnership, other companies that have tools that you might need to produce this specialty food item, so really thinking as creatively as possible about what you can offer a potential backer because really they’re investing in you, in your vision, in the fact that in many cases, I feel, with food producers it’s about the continuation of a tradition or a philosophy. There’s something else that is underneath your business that is not simply the food product itself.


Jennifer:That’s a great point. Thank you for sharing with us that idea about that there might be other pieces that a food producer can be thinking about that’s not just necessarily the product itself.


One thing that I wanted to talk about because we mentioned this a little bit, it was in your bio, but one of the services that your company, Crowdfund Better, offers is helping entrepreneurs understand the right crowdfunding platform for them to use. Can you talk a little bit about why this is such an important piece of the puzzle because there tends to be one or two big guys that people most often gravitate towards, but ultimately that might not be the right one for their campaign, correct?


Kathleen:Yes. I’ll say yes and no to that. Really, the success of your campaign is dependent upon you, the crowdfunder. If you are not willing to leverage your network, if you are not able to put the time in, if you don’t have the resources to do the marketing and get your video made, it doesn’t matter what platform you use. You’re not going to be successful unless you’ve done all those things. That said, one of the things that I really specialize in is understanding the ecosystem of crowdfunding. There are over 1,250 platforms in 200 countries right now, and most people think only of Kickstarter or Indiegogo. I love both of those platforms. I know the staff at those platforms and their technology is really solid. But there are smaller platforms, and since we’re talking food let’s talk about Barnraiser, specifically. Barnraiser is a niche platform that focuses on sustainable food, and so they understand the audience that you’re talking to, they have resources they can put into play for you. In fact, for one of my clients that worked with Barnraiser, they found her a matching grant, because they’re aware of the ecosystem.


It’s also a different experience on the smaller platforms because of the fact that they are smaller, you can get more one-on-one connection; you can talk to a real person. Unfortunately, Kickstarter, the scale that it’s at, they have so many projects, and they actually have a very small staff. I know people think they have this huge machine, but it’s actually a very small staff that’s based out of Greenpoint, Brooklyn, and they’re doing all of this work, so they don’t have the capacity to provide that one-on-one consulting. The smaller platforms, including Barnraiser, this is why they’re in it, is to be a part of the community. As opposed to Kickstarter and Indiegogo, where if they send out an email that is featuring a couple projects, those are a couple projects that are going out to everyone who was ever backed a campaign on Kickstarter or Indiegogo, when Barnraiser sends out an update, they’re sending it out to people who have already backed or are interested in food campaigns, so the likelihood of you getting someone you don’t know to back your campaign is greater.


Jennifer:It goes back to that fishing analogy that you shared with us a couple minutes ago, of being able to put that shiny lure in the right place.


Kathleen:Yes. Absolutely.


Jennifer:Well, I want to ask you one final question. You’ve given us just absolutely ton of phenomenal information. Like I said, my head is spinning in a very positive manner. If you could say, and I’m sure that you’ve seen more than one, but is there one mistake that you tend to see happen again and again from entrepreneurs, that you don’t work with, that keep them from reaching their crowdfunding goals?


Kathleen:They don’t ask everybody. I work with a lot of individuals who have never asked for anything before in their lives. They’ve sort of made a go at it. They’re not that comfortable asking. What I have found with the entrepreneurs I work with, in fact I received an email from one of my clients recently who said, “You told me that this would be a transformative process. I didn’t realize just what that meant.” Would you go through the experience of putting your idea to the world and finding that there are people who are supporting you, people who you never knew, people who you knew but didn’t know that they knew what you did or didn’t care? It is transformative for you not just as a business, but as the owner of a business to have hundreds of people say yes to your idea that you thought was crazy.


What’s the mistake that I see people making? They don’t ask everyone. They figure, “Well, they’re not interested.” You really don’t know until you ask. You’ll discover that people have interests you never imagined and that they have connections you never imagined. Not asking, and beating up on yourself, “Well, they didn’t … or they didn’t give the first time I emailed.” Well, statistically, even your closest friends and family will need to be contacted three times before they’ll take action.


Jennifer:Oh, wow.


Kathleen:People get disheartened, “Well, they didn’t reply.” Well, yes, because people are busy …




Kathleen:… even with the best intentions; they weren’t at their computer, they’re child interrupted them, the phone rang, whatever it was in the middle of reading your email, and so it’s not that they don’t want to participate, they just need to be reminded and reminded in a way that is fun and interesting.


I’ll put a star, an asterisk, on the biggest mistake. Crowdfunding project creators, all they do is ask in their communications, and so every communication they send out is, “Please give to my campaign. Please give to my campaign. Please give to my campaign.” Really, when you have those communications, it’s about what you are giving, so what will this project do for your potential backer and how can you communicate with content that is interesting and engaging and fun that will make them want to be a part of what you’re doing, because if you just continually ask then it creates a kind of fatigue and eventually they’ll just stop listening, so asking and asking in a way that is also giving. That’s the heart of crowdfunding. It’s about community. It’s about individuals making choices that the bank, or the investor, or whoever, they didn’t see the potential, and so instead of having to wait for those individuals to decide, you get to go out and ask people at large, “What do you think of this idea?” The key is to ask.


Jennifer:Oh, well, thank you. Again, that paradigm shift that you just shared with us of not just asking but asking in a way that gives is really powerful and one that we should remember not only when it comes to crowdfunding but also in all of our communications with our customers and supporters, so thank you.


Kathleen:Well, thank you for giving me this incredible opportunity. I tell people I’m just a big crowdfunding geek, so I love to talk about this and I love to watch entrepreneurs make their dreams real with this new tool. You said paradigm shifting, and it truly is. I don’t think we yet understand as a society, as an economy, how groundbreaking this is for the ability for an individual to make a living in this world in a way that is meaningful to them.


Jennifer:Wow. Well, thank you so much.


I do want to encourage and remind all of our listeners to go check out the Crowdfund Better site. That’s, and we’ll have a link to it up on our website. It is a phenomenal resource, a lot more information there. And so you know, Kathleen also runs workshops, and so I’d encourage you to take a look at that and learn more, especially before you begin the process of creating your campaign so that you make sure that the steps that you are taking towards creating your campaign are the right steps.


Thank you so much for joining us, Kathleen. Really appreciate your time, your passion, and giving us this opportunity to learn from you, so thank you.


Kathleen:Thank you, Jennifer.


Jennifer :  I hope you enjoyed today’s podcast and it gave you some food for thought with regards to crowdfunding. We’ll be continuing this ‘crowd’ discussion in the next podcast as we’ll be talking with an expert about alternative crowdsourcing methods small businesses like yours can use to raise capital.

As always, if you find this podcast series informative, I invite you to tell other food entrepreneurs you know about it and subscribe to it on iTunes by searching for the words Small Food Business. I would love it if you would leave a review as that helps me know what’s resonating with you and helps other food entrepreneurs find the podcast in the iTunes system.

I also invite you to join the Small Food Business community at where you’ll find a ton of resources specific to food entrepreneurs as you start and grow your business. Our facebook page at is also a great source for food business information and we’re on a host of other social media channels as well. I look forward to connecting with you. Thanks!

To listen to other podcasts in this series, click here.

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