Food Entrepreneur - May 12, 2020 - 10

FOOD ENTREPRENEUR

Crowd
pleasers
BY MONICA WATROUS

E

ntrepreneurs are embracing crowdfunding as a low-stakes opportunity to
raise capital while testing and refining
new product concepts. On crowdfunding
platforms Kickstarter and Indiegogo, food
startups recently highlighted concepts such
as vegan pastries and halal beef jerky, hoping
to raise thousands of dollars to transform the
prototypes into products. In exchange for a
donation, backers were promised samples,
merchandise and other incentives.
"Crowdfunding is like having a free
focus group on which to try out all your
great/crazy ideas and find out which ones
are most appealing to consumers," said
Nancy Kalish, founder of Rule Breaker
Snacks, New York.
Rule Breaker Snacks produces vegan,
gluten-free packaged brownies and
blondies. The company created a Kickstarter campaign last March to develop
and commercialize a new line of bite-size
treats, formulated with ingredients such
as chickpeas and dates.
"We definitely needed the money to
help launch a new line," Ms. Kalish said.
"But by the time you fulfill the rewards
and pay Kickstarter their fee, you don't get
to keep most of the cash. I knew that going
10

Food Business News

More than money
Crowdfunding offers benefits
beyond traditional fundraising. Startups
may validate businesses and products,
grow brand awareness and gain a loyal

following of early adopters and advocates.
Kickstarter and Indiegogo are examples of
rewards-based crowdfunding sites, providing perks to contributors in exchange for
money. Through the equity crowdfunding
model, founders on such platforms as
StartEngine and Republic sell ownership
stakes to investors. A regulatory framework was established for startups and
small businesses to raise capital through
crowdfunding under the Jumpstart Our
Business Startups Act (JOBS Act) enacted
in 2012.
More emerging brands may consider
crowdfunding in the coming months as
traditional fundraising options dwindle
in a post-pandemic environment, said
Nick Hamburger, co-founder of Quevos, a
Chicago-area snack company.
"Folks are going to be turning to not
only Kickstarter but some of the more
equity-focused platforms," he said. "I think

Quevos manufactures egg white crisps featuring flavors such as cheddar, sweet barbecue
and sour cream and onion.

QUEVOS

Startups use crowdfunding sites to raise
cash and test ideas

in. So, I looked at it as more of a marketing
effort to generate buzz for free."
Rule Breaker Snacks initiated the
campaign with a goal of $10,000, "which
we reached in under three hours," Ms.
Kalish said. By the end of the three-week
period, a total of 403 backers had pledged
$28,403 to support the production of Rule
Breaker Bites.
"We offered our backers a variety of
rewards, lots of bags of Rule Breaker Bites,
depending on how much they pledged, as
well as rewards featuring our grab-and-go
products that were already on the market,"
Ms. Kalish said.

May 12, 2020
Food Entrepreneur - May 12, 2020

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