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Tagged: “Raising Capital”

How The Fair Food Fund’s Patient Capital Yields Great Impact

How The Fair Food Fund’s Patient Capital Yields Great Impact

Seeded with a 2012 challenge grant of $3.75 million, the Fair Food Fund, the impact investing arm of Fair Food Network, has attracted a total of $6.4+ million in grants and program related investments from more than 20 funders. Since then, the Fund has provided more than $3.6 million in financing and business assistance to over 80 enterprises across 9 states in the Northeastern U.S. Such investments have in turn created over 150 jobs, supported over 1,000 family farms, and stimulated $25 million in local purchasing. Serving up financing and business assistance in combination with networks allows the Fair Food Fund to meet the needs of a wide variety of good food entrepreneurs.

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Food Entrepreneurs: Investor Due Diligence is Good For You

Food Entrepreneurs: Investor Due Diligence is Good For You

Because food businesses tend to grow in a stairstep function rather than incrementally, most food businesses need to raise outside funding to be viable and profitable. It can be a daunting and grueling process to raise capital while also trying to develop new products, acquire new customers and hire employees; thus, we have found even the best entrepreneurs need help to do it right. Investor due diligence can help entrepreneurs to mature their businesses into viable enterprises because the due diligence process forces them to get clear and articulate about how they make money and their goals.

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Tim Keane On Golden Angels Investors’ Funding Philosophy

Tim Keane On Golden Angels Investors’ Funding Philosophy

Golden Angels Investors is a group of angel investors which began in 2002 with the goal of helping capital formation for entrepreneurs in the Midwest. They specialize in technology investments across multiple sectors, but invest in a lot of health care and EdTech companies because they have the expertise among their members. As a group of angel investors, Golden Angels tries to be conveners around shared goals in the entrepreneurial ecosystem, working collaboratively and helping to connect entrepreneurs with the right resources even if their companies will not receive an investment from a member. Entrepreneurs should focus on building their sales and getting as much customer feedback as they can before they risk too much with the business. This, as well as the identification of competitors, helps validate that the business has some traction in the marketplace in the eyes of investors. Entrepreneurs should take as little outside money as rationally make sense (without undercapitalizing the business) and on terms that make sense for the next round of investment.

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Your Food Business’ Capital Needs Change Over Time

Your Food Business’ Capital Needs Change Over Time

The need for outside capital never goes away in food businesses – it just changes as the business changes. Getting proper financing for growing food businesses is one of the most challenging obstacles food business owners face. This is due in large part to the high bar for fundraising and financial communication when growing a food business. And, there are often many sources of capital that need to be brought together to adequately fund the growth of these food businesses. This food funding ecosystem is diverse, with many funders having differing expectations about business outcomes and the business owner’s responsibility or obligation to them as a funder. The money is there, if you show up with the right stuff and know where to look! To finance and grow profitable food businesses, entrepreneurs need to be able to navigate the expectations of these capital sources and understand at what stage they could be most useful.

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Joel Solomon On How Food Businesses Can Be Part Of The Clean Money Revolution

Joel Solomon On How Food Businesses Can Be Part Of The Clean Money Revolution

There is a disconnect between early stage entrepreneurs’ perceptions of available money for their venture and the sheer volume of individuals and funds looking to invest in the space at various stages, if you know where to look. Most entrepreneurs start out with “friends and family” funding (essentially people they know who will take a risk with them), later moving on to “angel” funding, usually by people who have run successful food businesses themselves and understand the space in that specific way. After entrepreneurs have grown their business with that type of funding, typically to at least $1 million in sales, they have then demonstrated enough traction to appeal to venture capital firms. However, natural food investors are starting to look at even earlier stage companies now that there is so much competition at the product, retail and investment levels of the food business ecosystem.

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How A Bank Can Strengthen Farming Communities Through Innovative Lending

How A Bank Can Strengthen Farming Communities Through Innovative Lending

Ephrata National Bank in Lancaster County, Pennsylvania is a $1 billion community bank with 25% of their portfolio funding agricultural entrepreneurs. The bank’s staff have found that changing the price the farmers receive via new business models or premium offerings through things like organic production or value-added processing helps farmers deal with high land prices and avoid commodity agriculture’s low return on assets. Lending is a “high-contact sport” and relationships with lenders can help food businesses solve key business problems. Partnerships with government programs from the FSA, SBA and USDA that encourage food and farm lending are essential to make many of these lending relationships work. But, there is a lack of technical assistance nationally to help more lenders understand (and underwrite) cross-disciplinary business models (ex. a farming operation with a cheese plant that resembles food manufacturing). There is also a lack of training on how entrepreneurs and lenders can leverage all of the different sources of capital and programs available to entrepreneurs to make more deals happen.

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How Union Kitchen’s Ecosystem Helps Build Profitable Food Businesses

How Union Kitchen’s Ecosystem Helps Build Profitable Food Businesses

Union Kitchen is a shared-use kitchen and food business accelerator in in Washington D.C. While having a shared-use kitchen eliminates the need for capital for kitchen equipment, there are many other things food businesses need to raise capital for, which why they have distribution and retail outlets as part of their model. Their vertically integrated business and infrastructure – the kitchen, distribution and retail outlets – pairs with its accelerator program, which includes technical assistance, mentorship, classes and other means to help its members be successful. They have worked with over 400 businesses that have hired over 1,000 people and of those 400, 80 have opened their own storefronts. The financial community is more willing to provide capital to their member businesses because their ecosystem has allowed their members to prove that their products have traction in the marketplace and their operations are solid.

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Value-Added Producer Grants With Jim Gage

Value-Added Producer Grants With Jim Gage

James D. Gage Consulting is a firm that helps value-added farms and other agriculture clients problem solve in critical business areas so that they can be financially viable. Jim’s firm works as a value-added business strategist and creates a client-consultant relationship with entrepreneurs before writing a Value-Added Producer Grant (VAPG) for their business so that he can both write a better grant and provide more meaningful follow-up technical assistance to help them implement the grant. VAPGs include both Planning Grants (maximum: $75,000) and Working Capital Grants (maximum: $250,000). While the VAPG grant can be complicated (for example, a 75 page application plus Business Plan and third-party Feasibility Study), it requires applicants to critically consider expansion of the customer base and the marketplace for products as well as demonstrate how they will have sufficient business structures, profit and cash flow to operate in the long-term. Adding value-added as part of a farm’s business strategy is one of the key financial means to help farms transition to the next generation.

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Why and How To Think About Social Impact Investing In Food

Why and How To Think About Social Impact Investing In Food

From a business perspective, social impact isn’t as important as having a viable business model. Food entrepreneurs, when speaking to investors, should to clearly communicate the business model of their company, which means talking about how their business will make money and on what time horizon. This doesn’t mean that food entrepreneurs should hide their social mission or desired impact from investors or anyone else, but rather that they should contextualize their social goals as part of the larger business strategy. Because food businesses need to be financially sustainable to achieve their goals, including impact goals, understanding their business model and aligning their efforts behind the model is the best way for these businesses to achieve their impact goals. No money, no impact.

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Impact Investing In Regenerative Agriculture

Impact Investing In Regenerative Agriculture

Eric White is a Principal at Cogent Consulting, a firm which helps social entrepreneurs and revenue-generating nonprofits raise social impact investments. Cogent also works with social impact investors to source investment opportunities and helps them build their portfolio strategy, including the incorporation of tools like Program Related Investments (PRIs). Eric feels that cash flowing and making money can coexist with goals of social impact as long as entrepreneurs “translate” their message for different audiences, including using the language of business models and finance when seeking investment. Eric thinks there are investable opportunities in companies that provide support for regenerative agriculture systems. And, he has seen smaller, donation-supported loan funds with loan amounts in the $15,000-$50,000 range – combined with technical assistance – fill a market gap for small entrepreneurs as they scale up and seek larger sources of financing later.

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