Non-Traditional Ways to Fund Your Food Business
Note: This blog post originally ran on the Carolina Farm Stewardship Association blog. Copyright 2015 Watervine Impact
Accessing capital can be a challenge for a food and agriculture business. The gap between investors and entrepreneurs is sometimes hard to bridge. Investors may lack understanding of farm and food business growth stages and try to apply financial models from other industries. On the other side of the equation, farmers and food entrepreneurs sometimes become “accidental entrepreneurs,” inheriting the family farm or following a passion for cheese making until one day a passion has grown into a business and it is time for expansion. Sometimes a catastrophe happens and a business needs cash fast in order to rebuild a flock, repair a barn or create infrastructure to handle recurring droughts or floods.
At the CFSA conference in November, I will host a workshop on how to find the right new funding option for your food or farm business. Traditional sources of agriculture funding include farm dinners, farm credit, or even your credit cards, all of which can be expensive and inflexible. Many of the new tools were developed in response to the need for better and more diversified sources of funding for local food enterprises.
The range of non-traditional possibilities can be overwhelming – from donation-based crowd funding to crowd-sourced loans like Kiva, low interest loans from Slow Money, program related investment from a foundation or even selling equity in your business to raise capital. Our conversation will help you understand the different options and begin to assess what is right for your needs. I hope you will come prepared to share your stories and knowledge. There are many ways to finance a food or farm enterprise and we can learn from our varied experiences. We will use a simple framework tool that maps your business need to the capital raise. As an added bonus, we’ll provide marketing and communications tips for you to take home on how to prepare for your capital raise.
To get started, you should think about the basics – your enterprise budget. (Yes, I know, technical assistance providers are constantly going on about those pesky enterprise budgets!) But no joke, they help. You can’t get to your destination if you don’t know where you are going and how much fuel you need to get there.
Investors will require you to demonstrate a clear understanding of your business goals, your cash flow to date and your projections for how you will use the capital and repay the loan or investment. Even if you are eligible for a grant, you will increase your likelihood of getting funded if you can demonstrate that you understand your business and have a plan for financial sustainability.
Once those basics are done, you are ready to begin to think about the specific options for raising capital. If you have ideas, questions or stories for me, please feel free to reach out and message me through LinkedIn. It’s going to be another great Carolina Farm Stewardship Association Sustainable Agriculture Conference and I look forward to meeting you in November.
