When President Obama signed the JOBS Act ( Jump Start Our Business Starter-Ups) legislation into law last April, I doubt he had any idea what an impact he would have on the food industry. One important part of that legislation was the relaxing of the SEC rules regarding accredited investors and start-up companies looking to raise capital.
Before the legislation, only accredited investors could be solicited to buy equity in a non-publicly traded company. But In July, Mary Jo White, the new SEC boss called for a vote on adopting the new rules. The SEC vote finalized rulings around Title II of the JOBS Act. The vote alleviates the longtime ban on public solicitation. A new category of offering called 506(c), that essentially allows companies, for the first time in over 80 years, to freely advertise that they are fundraising to the general public.
Enter equity crowd funding.
It is a new emerging market. Crowd funding has been around for centuries. There isn't a business owner in the world who has not done a small bit of crowd funding. It's always been how you begin a business. Whether asking everyone at the Thanksgiving table to chip in a few bucks for an idea, or if you have sold bar stool placards at your restaurant in advance of opening, you have used some form of crowd funding.
Even bank loans, used to be consolidated funds from the crowd of customers the bank had on deposit. That's changed today, since banks tend to keep, rather than lend.
That was reason crowd funding sites first launched. The bank loan drought basically planred the seed for Kickstarter and indiegogo, the leading crowd funding sites. However, in the next months, sites will be popping up like prepared food stores in Manhattan.
The new laws will change the way America looks at business. Think about this: Doesn't everyone want to know the first investors at Google? Last September I attended a crowd funding luncheon with Sherwood Neiss the architect behind the crowd funding legislation. One of the hosts of the Napa event commented her son was the 13th hire at Google. Now, everyone will have an opportunity to help a company grow to 13 employees.
This will have a monumental impact on the food industry. Currently small foodtrepreneurs struggle with capital needs, daily. And that’s not just small companies. I know of a mid-sized manufacturer who just burned through $14 million as though it were an Internet company, only to sell off brands and restructure. And, three years ago, they thought they were successful.
Remember when food co-ops were the trend. Spend a few hours on a Saturday, organizing groceries, produce and dairy and you'd get a discount on your products. You'd get to meet the goat milk guy from Sherbourne, Vt., you'd shake the hand of the Sprout sweetheart, and of course, who wouldn't want to stick out a hand for the honey. Yes, they were places for food, but also for community.
That's shifted with the birth of farmers markets in every town with culinary soul. And, it is about to shift again.
Enter FoodieCrowdFunding, equity
Currently, crowd funding is PERK based. If you support a project, you receive in exchange for a contribution either product, service, knowledge or event. Foodiecrowdfunding is currently a PERK based platform, but the company is developing an equity arm to help move food companies to market. And, this will change the way America sees food. And buys it.
Shanais Pelka is the founder of Nii Bars. A passionate nutritionist Pelkas has a knowledge for healthy, organic products. She developed Nii Bars (more on this later) because she knew there had to be a better product on the market. And, she is accomplishing her goal. Today, Nii Bar is raising money to grow. And, consumers who want to see Pelka succeed are supporting her PERKS.
In the future, consumers will be able to review companies, hear the owner’s story, test the company’s products and decide whether to buy product, invest capital, or simply click and turn the page.
For the first time we will be able to meet those people who make our food, both online and if local, in person. That is becoming ever so important.
Here’s a story. A food manufacturer makes a product. Each ingredient is cooked individually and then combined as the recipe requires. The product is completed, shipped to the grocery store and the consumer buys it and loves it.
The brand is sold. The ingredients are dumped in a kettle, they all cook at the same time, at the same temperature. The product is bottled, shipped and placed on the grocer’s shelves.. Does the customer know? Probably not. But the main ingredient was left out.
Yes, equity crowd funding will do more than just entice people to invest in a company. In the food sector, it will mirror a “back in the day” co-op.
Equity crowd funding will put the passion back in the food products we eat to live longer. One manufacturer at a time.