When Eileen Gordon Chiarello and her husband/chef/cooking show host Michael Chiarello, took over 20 acres of California vineyards for their Chiarello Family Vineyards, she watched as Americans started asking questions about food and taking sustainable-food matters into their own hands.
“While I believe we are still at the early stages of this movement, the people who are leading us in artisan food; local, sustainable farming; and healthy habits are emerging as our modern-day heroes,” she says. “I knew that I wanted to create something that could enable us all to become partners in scaling and accelerating this movement, while celebrating the success stories in all their forms.”
And so the food- and farm-crowdfunding website Barnraiser was born. Chiarello describes it as “an online community for the millions of us who care about good food, sustainable farming, health and wellness to support the people who are reshaping how we farm, eat and live, one project at a time. In the metaphor of a barnraising, when the community comes together to help sustainable businesses grow, we all get better food.”
Through Barnraiser, you come up with a project idea, develop a business plan and a budget, and propose this idea to the world via a profile on the website. People near and far can fund your proposal, and if you reach your funding goal, the pledges are dispersed to you and you move forward with your project.
Crowdfunding platforms like this and loans aimed at artisan producers allow small-scale food and farm businesses to take root and grow. Traditional funding sources, such as banks, bonds, farm credit services and USDA Farm Service Agency loans, are still viable options for some small businesses, though the mainstream options can sometimes be more difficult to secure when you consider that farm and food businesses are a little different than those in other sectors. With access to capital consistently named as one of the top two barriers to farm startups—access to land being the other—alternative funding sources are supporting a rapidly expanding industry and could be supporting your farm next.
Crowdfunding
Barnraiser is the food- and farm-focused crowdfunding website, but there are plenty of other mainstream websites that you’ve probably heard of, too: Kickstarter, Indiegogo and GoFundMe, just to name a few.
There’s another type of crowdfunding that’s boosting farm businesses, too: Kiva Zip offers crowdfunded loans. Unlike Barnraiser and Kickstarter, you have to repay the money you receive through Kiva Zip loan, and unlike traditional funding, these loans have 0 percent interest. Rather than a large financial conglomerate paying your way, you might receive 50 microinvestments from friends, community members and total strangers who happen to like your story.
The norm in funding models like this is that you don’t have to pay to participate, but the host will take a percentage of your earned total as its fee. If you don’t meet your fundraising goal, you don’t have to pay for the service, but your potential funders are not charged, either, and so you don’t get to keep any money for your effort.
With both of these funding models, you’re not just raising money, but you’re raising awareness by sharing your story, too.
“This form of crowd- or community-funded projects promotes the diverse stories and products of the movement and allows the public an even greater way to vote with their wallets about what they want to see on their table,” Chiarello says. “And when farmers and food producers tell their story publicly, they gain a vital set of supporters and customers.”
Farm and food projects that have been funded through crowdsourcing sites are innumerable, including buying a new tractor to replace a stolen one, publishing a local-ingredients cookbook, expanding facilities for an artisan tea company and building new greenhouses on an urban farm.
If you don’t qualify for more traditional, bank-supported funding, such as when you are looking for a small amount of capital or are just getting started, crowdsourcing could be for you.
“Using crowdfunding to get incremental growth or working capital and build a base of fans/customers is the power of this style of funding, which does not include paying back a loan or giving up equity in your business,” Chiarello explains. “It is ideal for funding levels from $2,000 to over $100,000, if done correctly. Larger initiatives, for which matching grants or other funding is available, can use crowdfunding to kick off that larger campaign and get exposure for the broader funding goals. And because crowdfunding campaigns are public, one donation helps to galvanize others, which is not true of getting an individual grant, or a loan or giving up equity in your business.”
Artisan Loans
Some nontraditional lenders include larger businesses that stand to benefit the most from small-scale farm and food ventures. The Whole Foods Market Local Producer Loan Program, for example, has been around since 2007, funding more than 275 projects.
There’s a small processing fee and a simple, online application. Getting funded is the goal here, of course, but as Erin Harper, who oversees the program, points out, “The intangible benefits of [it] are also beneficial, including access to store and regional buyers; a deepened, collaborative partnership with regional purchasing teams; in-house marketing support; and education and mentoring opportunities.”
Some of Whole Foods’ loan recipients have included expanded storage facilities for an heirloom-popcorn producer and a walk-in freezer for an organic berry grower.
“True to the nature of ‘local,’ [our recipients are] dependent upon each region,” Harper says, “but we are always looking for produce that meets our quality standards or has other differentiating factors, like organic, non-GMO and heirloom.”
A small-scale farm- and food-loan program that’s gained more attention as the slow food movement grows in the United States is Slow Money. With a mission “to catalyze the flow of capital to local food systems, connecting investors to the places where they live and promoting new principles of fiduciary responsibility that ‘bring money back down to earth,’” the nonprofit has secured investment for more than 400 food and farm operations to the tune of $41 million.
Slow Money loans are funded by individual investors who hear presentations from farm and food entrepreneurs and choose which projects are most worthwhile. Among Slow Money’s loan recipients are urban farms needing to fund labor costs, food co-ops extending memberships to disadvantaged community members and textile businesses sourcing local, organic fibers.
Hybrid Financing
Part crowdfunding, part lender-financed, some alternative funding organizations, such as Community Sourced Capital have all the bases covered. You go to them with an idea, and they either help you fund it through your own community and social network or they hook you up with a small-business lending partner who is aligned with your mission. CSC boasts that 90 percent of the businesses they work with get funded. Restaurants wanting to open a second location, businesses seeking funding for alternative-energy sources and upgraded equipment for a community bakery are a few of the CSC projects in the works.
When your farm-business dream is knocking at your door, don’t let the excuse of “I don’t have the money” limit you. With creative funding measures like these—not to mention the traditional-lender options that you might qualify for—many more food and farm dreams are attainable today than even a few years ago.
This article originally appeared in the November/December 2015 issue of Hobby Farms.
