Bucha Brew is about to embark on our second round of crowdfunding for equity in one of the most uncertain times in history. Not only is the is financial landscape rocky but global uncertainty about health, community, and when personal human connection will return to our daily lives is high. So how do we remain conscious of the emotions of our global community while continuing to run our businesses? How has the fundraising conversation changed? Is there a way to compassionately reach out to strangers in this current climate and ask them to give you money to help your business grow?
April 2019- After many conversations with multiple funds Bucha Brew decided to raise capital through FrontFundr using equity crowdfunding; however, I strongly dislike this term so from here on in I'm going to call it a community raise. I say we "decided" but the truth is we didn't have a choice. We were too small for funds and our friends and family taps were dry. We needed to raise to fund the growth that we had already experienced and the contracts that we had won that were starting in a few months. We had never formally raised before and the entire process was daunting. Frontfundr patiently walked us through the whole process step by step and we had completed our first close in July, THREE months later. We had been speaking to VCs for double that time with no progress.
April 2020- Once COVID hit, all investment conversations were put on hold. There is literally no money moving through any VCs, and Angels are holding their wallets tight. Our business is still producing, as we are lucky to be selling in grocery and convenience stores. The main piece that we weren't expecting was the increased direct to home delivery orders (DTC) and that the export conversations would still be happening. We have made the pivot to improve focus and operations of DTC, we have new packaging and it's a whole new marketing game - this all costs money! We reached out to FF and less than 4 weeks later our new campaign has launched.
Benefits of Community Fundraising (aka Crowdfunding for equity)
- You choose the investment minimums, valuation (with great guidance and advice), and all raise guidelines
- Loyal community- this is a massive marketing benefit. Through our shareholders we have gained over 100 superfans and you bet they are happily telling their friends to only drink our brand.
- Giving people a chance to invest with their values- this was one of the most common pieces of feedback I received from our investors. Although we aren't an impact first company, (making a single use cpg product it is almost impossible to be) our thinking, actions and communications are all impact focused. We have a positive message to send while keeping health and wellness at the core.
- Bucha Brew gets to raise, build our regenerative community during one of the most challenging times to raise money. It feels like another level of connection in that our investors really care about us as people and it shows how much they really believe in our purpose and vision. They are willing to support us in times like these.
- As a women run company, we found that having investment conversations with mostly middle aged white male angels and VCs with tech backgrounds (no offence, really!) was really hard. A lot of them hadn't heard about Kombucha and they aren't used to backing female ran companies. I felt like the opposite was true with the community investors - they were so proud to support a women ran local Canadian business
- Once you choose community raising it can be challenging to return to "normal"ways of raising...but whats normal now a days anyways? This can be mitigated in part by keeping the valuation reasonable.
- People talk about having a messy cap table- its not messy if you keep it organized, Im sure you have all heard of google docs or whats that other one... excel?!
- It is a lot of work to build and run a campaign. I spent 90% of my time and energy on newsletters, social posts, creating content, responding to emails and constantly updating. If you feel like you already don't have time to run your company, make sure you get some help! That said, this is no different from traditional fundraising!
- I heard recently on a webinar that the platform takes upwards of 25% of your raise- this is false, it was less than 8% in our case
- Messy cap table is solved through the VTA- All investors sign a voting trust agreement which assigns their voting rights to the company decision maker, simplifying too many small voices at the table
Embrace the changes we need to make in order to build a resilient future!
Kara Sam - Mom, President and Founder. With two previous businesses under her belt, along with two young boys, Kara was ready for more. In characteristic Kara fashion, she turned the discovery of Kombucha in Hawaii to a personal project. With a passion for helping people, health, and building a better community, she has turned Bucha Brew into a vehicle for positive change. Reach her at Kara@buchabrew.ca