I know I should wait until there is three of something before calling it a trend, but Spoon readers: Is something going on with equity crowdfunding?
Over the course of two business days, two bits of equity crowdfunding news came across my desk. On Friday, GoSun announced it was going back to equity crowdfunding to raise $500,000 of its Series A, and today GOffee (noticing a “Go” trend here) announced it has raised $1.07 million via equity crowdfunding. Both companies used StartEngine’s platform to raise their funds, FWIW.
For those who need it, here’s a quick primer on equity crowdfunding: It’s kinda like regular idea crowdfunding you see on Kickstarter and Indiegogo. Only instead of buying a product, regular (or “non-accredited”) investors, everyday joes, can buy actual shares into the company. If there is an exit for the company, investors would get a return, though I recommend reading StartEngine’s FAQ to learn more about the specific rules and risks around equity crowdfunding.
As noted earlier, this is GoSun’s second trip to the crowd for money; the company raised a $500,000 seed round in 2017. I spoke with GoSun CEO Patrick Sherwin about the decision and he said he liked equity crowdfunding because it allowed him to grow the company at his own pace, without a VC firm pressuring him to scale up quickly so they can get their 10x return.
But in the case of crowdfunding, cash is all you’ll get. In addition to money, the right VC brings with them industry connections, mentoring and advice. Going to the crowd, ironically, means a company is more likely to go it alone.
Things get tricky from a regulatory perspective when you talk about investing and financing and all that, so I should take a quick moment to say that I’m not endorsing equity crowdfunding as a funding mechanism or as an investment opportunity. Like with any investment opportunity (or crowdfunding!), there is no guarantee. Do your research and caveat emptor.
Like I said, it’s too early to call equity crowdfunding a trend. In addition to GoSun, there are just ten other active food and beverage companies on the StartEngine platform, most of them drink-related (spirits, CBD drinks, etc.), and seven of which have hit their crowdfunding goals.
The idea of opening up and allowing anyone to invest in your company on this type of scale is a new one. I imagine we’ll see a lot of startups try this mechanism in areas where there aren’t a lot of VC firms or other types of startup infrastructure. Like regular crowdfunding, we’ll see a lot of flameouts, but also one or two homeruns.
Cloud Kitchens are just fine, thank you very much
Last week, a TechCrunch headline proclaimed that “Cloud Kitchens is an Oxymoron.” I wrote a response outlining the ways in which the cloud kitchen business is actually good thanks to companies like Kitchen United, and exciting even with new developments from Zume and Ono Food.
I bring it up not to re-pick a fight, but because of the number of people who reached out to me after that post. It seems that both articles really struck a nerve and our readers have some thoughts. I encourage you to share them! The best way to push this industry forward is to have robust discussions about difficult topics like business models and the necessity of new technologies. You can always drop us a line, join our highly active Spoon Slack Channel, or leave a comment on a social media channel like Linkedin.
Photo: The Spoon
Smart Kitchen Summit videos are going live
If you couldn’t make our (awesome) Smart Kitchen Summit this year, or want to catch a session you missed, good news! We’ve been furiously uploading video from the panels, firesides and presentations to our YouTube channel and on the Spoon site. We’ve got a bunch up there now, and more are being added every day, so visit and subscribe to The Spoon YouTube channel and make sure you don’t miss a minute of it.
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