Food and value added agriculture businesses don’t grow in a linear way; they grow in steps. This means that companies raise money serially over time.
For this reason, we focus on creating long-term relationships with our clients, collaborators, and the technical assistance providers we train.
Once we take on a client, either on our own or in collaboration with other organizations or trained service providers, we help the business optimize their business model, fix their financial systems and statements as needed, develop a cash flow model and financial projections, structure their capital requirements, work with company legal counsel to develop any documentation needed to raise funds, then stand by the entrepreneur as he or she works through the process of asking for money. This is a time consuming, and sometimes stressful, process. Most clients take 6 months to a year to complete the request. Then, once they are really successful and growing quickly, we’ll get to turn around and do it again, this time asking for more money from different places to get a company to the next level.
Like most startups, young food companies focus most of their early energy on getting their product to market. In order to grow, however, they need to focus on two things: optimizing their business model and getting it funded. To do this, they need:
- A business model that can be economically sustainable. Many companies in the local food and value added farm sector need to change to make this a reality.’
- A well-conceived and realistic plan for funding the company’s growth. Most young food companies run out of cash to grow as fast as they need to in order to become financially sustainable.
- A professionally packaged funding request, with all of the necessary legal and accounting documents, for equity and debt financing requests from traditional and non-traditional capital sources. The emergence of new funding vehicles like crowd-funding, royalty lending, and Slow Money sources have made this exercise more complicated than ever.
- Connections to capital sources that are appropriate to a company’s capital needs.
- Someone who has been actively cultivating capital sources in their community so those sources are ready when the entrepreneurs ask for funds.