The Business of Food

The following is a guest post by Laurie Zerga, founder and Chief Culinary Officer of Chef-K, Culinary Health Education for Kids. Laurie’s company provides culinary programs that combine nutrition, the science of food safety, cooking instruction and table etiquette for kids ages five through eighteen. Her primary clients are organizations that support youth and families, such as Boys and Girls Clubs of America and Boy Scouts of America. She also works with school districts and the military.

Prior to founding Chef-k, Laurie had a successful career in corporate America.

Having been raised in a family business and now an entrepreneur, business is near and dear to my heart. So when Cathy Curtis, an investment advisor based in the Bay Area, asked me to attend a panel she was moderating entitled “Exploring New Approaches to Launching your Dream Business,” I gladly did. The panel was part of the Annual Women Chefs and Restaurateurs Conference (held in San Francisco at the Sir Francis Drake Hotel).

The PanelistsThe panelists: Brahm Ahmadi, co-founder and Executive Director of People’s Grocery; Sarah Dvorak, founder and cheesemonger at Mission Cheese; Eric Fenster, co-founder and co-owner of Back to Earth Catering and Gather Restaurant, Kim Grant, Director of Acquisitions for Mobile Skillet) and Iso Rabins, founder of ForageSF. It was a diverse group of food entrepreneurs, all of whom had rich experiences to share with the audience.

Eric Fenster launched the discussion with a review of the basics he felt were needed to start a business. Here’s a rundown:

1. What: You need a strong vision and passion to carry it through.
2. How: Get to work, figure out the nuts and bolts, and be prepared to put in lots of time.
3. Who: Build your team; pick people who are experts in their field including lawyers and accountants if you need them.
4. Why: Offer value to your community.

I found it fascinating that each panelist’s number one reason for starting their business was to support community and/or other food businesses through their expertise. Eric wanted to have a place for community to “gather” and enjoy local and seasonal food. Kim, using her technology and content expertise, wants to help entrepreneurs to create mobile apps to share their recipes through the Internet. Sarah wanted to build a place to introduce people to artisan cheesemakers. Brahm wants to provide a full-service grocery store to the low-income community of West Oakland where there are many liquor stores but no traditional grocery stores. Iso wanted to bring wild grown food to urban tables and, now, to create kitchen spaces for food entrepreneurs who would otherwise not be able to afford commercial space. Yes, they all want to make money, but that was secondary to pursuing their passion.

Funding a Start-Up Food Business

Cathy’s first questions were about funding, arguably the most important “ingredient” to launching a business. The panelists discussed traditional methods like bootstrapping, donations or loans from friends and family, angel and venture capital (VC) investors, credit lines, credit cards, and bank and SBA loans. Each panelist had varying degrees of success with each of these funding options. All acknowledged the difficulty of obtaining traditional bank funding.

The discussion got very interesting as the panel members began to mention newer and lesser-known channels to funding. One of the common challenges for start-up businesses is finding ways to get funding from individual investors. The federal and state regulations protecting investors date back to the Great Depression. Those regulations limit investment in private businesses to accredited investors; as a result the majority of people (non-accredited investors) can only invest in companies through the stock market.

But, individuals can make donations to small businesses and over the last several years several online platforms—called crowd-funding sites—have launched to make this possible. Iso and Sarah used sites such as IndieGoGo and Kickstarter to raise money.

Eric’s legal team discovered SEC Reg D, which allows small numbers of non-accredited investors (ordinary people) to invest in private ventures. Also, several of the panelists mentioned bill s.2190, the Crowd Source Act that President Obama recently signed legalizing investment by non-accredited investors. There are companies such as Crowdfunder that are ready to jump into this space when the Act takes effect. (The SEC is working on the details now.)

The Importance of Building Community

Another interesting theme that came up in the discussion was the importance of community building. Each panelist had spent a year or two finding and building their community using blogs and social media platforms (such as Twitter, Facebook and Instagram). They also sought out opportunities to plan low-cost events to promote themselves and their businesses. They took the time to build relationships with people who would later become their customers and in some cases, their investors. Iso (ForageSF) executed a very successful Kickstarter campaign, earning donations of $156,000. He attributes his success largely to his earlier community-building efforts.

I came away from the panel not only inspired by the passion that these food entrepreneurs shared for building business and community but excited about the new opportunities that may be around the corner for investing in small enterprises.

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