THERE IS MORE TO CROWDFUNDING THAN KICKSTARTER AND INDIEGOGO

For small, early-stage brands, fundraising is often the first thing they think of when they wake up and the last thing they think of when they go to sleep. The problem is, at such early stages, many of the traditional funding avenues are not yet viable. A small brand may not have the revenue to qualify for a loan, feel ready to pitch investors or have friends and family they feel comfortable asking for a seed round.

All businesses need cash, and even more so in the early days. So what can you do when most of the traditional fundraising pathways just lead to a dead end? The answer, for many brands, is crowdfunding.

“So like Kickstarter or Indiegogo?”

Not exactly.

While Kickstarter and Indiegogo are two of the most famous crowdfunding platforms, they are not the “only” platforms available. And what’s more, these huge platforms can often bring more problems than they are worth for small brands. Luckily there has been an explosion of crowdfunding alternatives over the last few years, and founders have a wealth of riches to choose from.

So what are some of these alternatives and how can brands know which crowdfunding platform is right for them? To investigate, we spoke to three CPG brands that have successfully run campaigns on two (relatively) new crowdfunding platforms: Republic and NuMarket.

HOW DO THEY WORK?

Republic is an equity crowdfunding platform similar to Wefunder or StartEngine. Rather than investing to receive a reward like on Kickstarter, individuals invest in companies they believe in and, in return, receive a share of the company. It has a base of over 1 million investors, is available to all US-based C-corps and LLCs, and has a campaign success rate of a whopping 90%.

NuMarket is a smaller food and beverage-focused crowdfunding company that operates on credits rather than securities. For every dollar spent, contributors receive 20% back in credits to use at the business they helped fund. With NuMarket, consumers can support food and beverage brands directly in a mutually beneficial exchange of funding for credits.

Choosing The Right Platform For Your Brand

Republic and NuMarket are just two of the many crowdfunding options brands can choose from, and each platform has its own rules, regulations, and idiosyncrasies that founders will have to navigate. Brands will need to consider who they hope to reach, what they can take on, and how big of a risk they want to take.

The founder of NuMarket, Ross Chanowski, and his team schedule phone calls with each brand considering their platform to ensure they are the right fit. He encourages all founders to talk to as many people as possible and get clear on what they’re looking for before starting a crowdfund. Who do you want to invest in your business? Do you want investors with deep wallets? Or customers who you might run into at your next pop-up? Furthermore, Alex Bayer, the founder of Genius Juice recommends choosing a platform that is aligned with your product and target audience. Genius Juice used Wefunder in the past but moved to Republic as Bayer felt the site attracted more CPG-specific investors.

It is also worth considering what your brand has the capacity to take on logistically. For example, to do equity crowdfunding on a platform like Republic, brands will need to allocate time and money to manage the legalities and due diligence process — the most expensive part of Genius Juice’s Republic campaign was the legal paperwork. Elena Guberman, the co-CEO of TBH, which just ran a successful campaign on Republic, echoed the substantial legal/tax fees associated with their campaign and emphasized the importance of staying organized throughout the process and consulting with your legal team if possible.

Larger sites like Republic will also require brands to create a wealth of new content and a robust marketing plan to break through the noise of competing campaigns and entice investors. The TBH team “wrote out a skeleton of all the different sections of our Republic page and collaborated on what each part should be. We read it 1000 times, edited 1000 times, and then finally put it up.” Bayer and his team spent “four to five months” before the campaign launched preparing their marketing materials, including videos introducing their new product, and graphics that displayed their top line and margin expansion, online sales growth, plans to scale distribution, and more. Despite some of this heavy lifting, both

Bayer and Guberman are vocal in recommending Republic to other CPG brands. In fact, Genius Juice’s first campaign on Republic in 2021 was so successful that Bayer and his team are currently running a second crowdfund to launch their line of wellness shots. Running a campaign on Republic is “a marathon, not a sprint,” says Guberman, but with proper preparation, “all of the challenges are completely surmountable.”

For a solopreneur like Tiffany Wang (founder of Ting’s Jackfruit Chips), however, running a marathon did not seem feasible while she was deep in the weeds of a rebrand and working through supply chain issues. But like any business, she still needed funding. So when she received a newsletter from Droplet, another small, woman-owned CPG brand, announcing they were doing a crowdfund via Numarket, her interest was piqued. “If it's good enough for Droplet, it's good enough for me,” she thought, and she inquired with the platform immediately. For the most part, crowdfunding on

NuMarket is largely logistic-free for founders, which was one of the goals Chanowski set out with when he started the platform. Brands submit three photos, answer three prompts, and NuMarket does the rest. As soon as the campaign ends, NuMarket sends the brands all of the funds they raised (minus a processing fee) no matter if they reached their goal or not. NuMarket also handles the credits, releasing them in increments once a month until the contributor has received the entirety of what they’re owed.

The ease of NuMarket was exactly what Wang needed at the time: “A fundraising method that didn’t take away from what I had to do on a day-to-day basis for my business.” Furthermore, as a first-time crowd-funder, Tiffany was grateful for NuMarket’s hands-on approach. “I felt a lot more comfortable working with a smaller platform that was able to give me the attention and assistance I needed to successfully carry out the campaign. I could ping Ross or his team when I needed resources or had a question and they would get back to me immediately.”

Brands should also consider the level of risk they are willing to take. Republic is a high-risk high-reward crowdfunding option. Fundraising on their site is all or nothing, and though 90% of the brands that raise with Republic are successful, you will not receive any of the funds if you fall into the 10% that is not. In this case, Republic will not take a commission, but brands should keep this in mind when considering the platform they’d like to choose. Do you have the capacity to successfully execute on Republic? Or do you need something with lower stakes and a lower barrier to entry like NuMarket? It may not have as large of a reach as Republic, but brands can be sure they will see every cent they raise at the end of the process.

No matter what you decide, be sure to thoroughly research all of your options before committing to one crowdfunding platform. “We are humans behind this,” Chanowski explains, “and we want this to be a mutually beneficial relationship.” Talk to the team at each platform you’re considering to ensure they are able to meet your needs. The crowdfunding process can feel daunting and overwhelming, and it is crucial to work with a platform you trust.

Gearing Up For Launch Day

Once you’ve decided which platform to use and the launch date is set, it is time to start preparing. “You can’t just sit back and expect to raise money,” remarks Bayer. He likens crowdfunding to running a campaign for President, “You have to get out there and talk to everyone.”

A few months before your campaign launches, begin reaching out to your network and the communities of people who might be willing to support your business. At TBH, Guberman organized this process by making four contact lists and tailoring personal outreaches to each type of connection: l Friends, family, and loved ones send personalized emails and/or texts to loved ones. l Current or potential investors reach out to anyone who has expressed investing in your business in the past, even if they did not end up doing so. l People who can amplify this list will include those who might not be able to invest monetarily but could amplify the campaign via social media or other platforms. l Your community if you are a part of any communities for startups or business owners (like Startup CPG) reach out to these groups and ask for contributions. Don’t forget to return the favor when it is their turn to do a crowdfund.

Social media can also play a huge role in the success of your campaign. After the initial burst of donations at the start of her campaign, Whitney saw her contributions slow to a trickle, but she continued to post on social media every day nonetheless. A few days before her campaign was slated to end, Ting’s Jackfruit Chips was only around halfway funded. Howev- er, at the 11th hour, someone discovered her brand on social media and swooped in to fulfill the rest of her funding goal.

Persistence pays off in crowdfunding, and you never know who will find your brand and when. Start getting the word out as soon as possible, and don’t stop until the campaign is closed the money is in your pocket — the last 48hrs of a crowdfund are often the most successful.

Crowdfunding Goes Beyond Money

Crowdfunding levels the playing field for small businesses seeking to raise money. “It is hard to raise institutional capital,” explains Bayer, “and it is even harder now with the tightening market. Crowdfunding allows us to grow our business without banging our heads against the wall.” But the benefits of crowdfunding go beyond money alone.

Crowdfunding, whether via NuMarket, Republic, or any other platform, provides brands with the unique opportunity to turn “customers into investors” says Bayer. Crowdfunding brings customers along as active participants in the brand’s journey, and the relationship evolves from something transactional to personal. If a contributor to Ting’s crowdfund brings their Jackfruit Chips to the picnic, they are not bringing a random snack they picked up from the store, but rather a product they personally helped fund.

The process of preparing for a crowdfunding campaign also requires brands to get clear and get loud on their long-term vision. There are no private meetings or closed doors in crowdfunding, and businesses cannot be shy about their hopes and dreams if they want to run a successful campaign. Wang explained that one of the most useful aspects of crowdfunding was that it forced her to put aside the excel sheets and to-do lists and consider the big picture of her business. “What am I trying to achieve and how am I going to do it? Asking people for money is a serious thing. If I’m going to do it, I want to be able to put my money where my mouth is.”

By Grace Kennedy