An Incubator Kitchen #4: Fundraising
These blog posts are an attempt to chronicle the creation of something that is totally new to me, a large, physical, brick and mortar shared use incubator kitchen. As this process continues I'll be writing here about what stage we're at, what problems we have, and how we solved them. This is all an attempt to help along those who want to create a similar project, while at the same time letting people know where we're at in the process.Money:
The biggest problem with building a 10,000 sq ft incubator kitchen is that it costs lots of money. Money on a scale that I don't generally think in, and to get that kind of money, fundraising is in order. We've decided we're going to do this in three ways:
We are lucky to live in an area with people who have money. It's as simple as that. Silicon valley blesses us daily with filled seats at our events, lines down the block for food trucks, and soon, a great space for small businesses to help get started. So far I've been approached by a couple investors who are interested in being a part of the project, and have started working with an advisor who is big in the angel investor scene. I've found that whenever I'm starting something new, mentors are essential. There is no point in beating your head against the wall looking info up online, when someone willing and knowledgable is a phone call away. It's amazing just how willing and interested people are in helping out, all you need to do is ask. We are still a ways off from locking down investment, but I imagine that about 3/4 of the money will come from this avenue. Finding investors is no small feat, but we are talking to people we know first, people who they know second, and people we think might be interested third. Especially in such a food-centric town, you'd be surprised who wants to be involved. My advice for people looking for investors is to make a list of people you think might be interested and get in touch. The worst they can say is no.
We'd be stupid to ignore kickstarter. It's a great platform for people looking to create something. If you're trying to raise money for something that you think people are interested in being a part of, kickstarter is a great avenue. The secret is a good video. Something that really draws people in, and lets them know how passionate you are about the project. In kickstarting a business, there is some concern from the kickstarter.com crew about projects that are not art-centric. I've heard that most projects get approved, but pitching it as not just a business, but that you're creating something with some other value can't hurt. Another note is never use the word "invest" in your video or anywhere in your pitch. The SEC considers what your getting through kickstarter a donation, not an investment, so they're sticklers on that point. We are currently working on a video that I'm excited about that will hopefully be out mid January. The rewards we're going to offer are going to be things like classes, kitchen time, boxes of goodies from vendors who are using the kitchen, etc. I want people who invest to really see the fruit of what they're helping to create.
This project is about creating a space that people use to create something that makes them proud. Simple as that. Whether that's a jar of jam or a jam making business. We want to get this idea out to as many people as possible, while at the same time letting people be involved in a way that's more tactile than donating online. In the next several months we're going to be planning tons of events. Movie nights, dinners, potlucks, scavenger hunts, etc, and partnering with the folks we've grown relationships with over the years throughout the city. We don't want this to be a kitchen that just people who know about forageSF frequent, but folks of all stripes.
We're also interested in having part of the funding come from "community shares". Small(er) sums of money from individuals, that will buy them a small share in the business, akin to Claires. It's a small restaurant in Vermont that was started by getting $1000 investments from members of the town. In exchange they were given a certain amount of meals free when the space opened. I love this concept. That the people who want to use a space help create it.
That's all for now. Basically what I've found is that if you're trying to create something unique, you've got to be creative about where the money comes from. This business will be successful, but because it's unproven, there is no way a bank is going to give us a loan. The great thing is that instead of credit, we have an amazing wealth of folks interested in being involved, which is better I think.
We'll be sending out info about our kickstarter and our events soon. If you're interested in helping us organize an event or have an idea for one you think would be great, we'd love to hear it.