What We've Learned So Far From Our Equity Crowdfunding Journey
As we near the end of the Food Connect Shed Equity Crowdfunding campaign, I thought it would be a good time to share some of the lessons we’ve learned and look back on all that we’ve achieved thus far. There’s certainly a lot to be grateful for and to reflect on.
Food Connect is a thriving business that started as a community project. We’ve been around now for 13 years and we’ve impacted our local food economy financially, socially and environmentally.
We’ve provided jobs, championed the circular economy, incubated businesses, and supported local farmers and we would have done none of that without our community. But, we realised that there was more we needed to do.
Emma-Kate reflects on the key lessons from leading one of Australia’s first equity crowdfunding campaigns for a community owned food hub.
Preparing to launch the Food Connect Shed
When our landlord offered us the opportunity to buy the shed, we were incredibly excited. It’s one thing to have a supportive community behind your venture, it’s a whole other kettle of fish to have a community take ownership of a new venture and be rewarded if it is successful. We really want the entire community to benefit, not just one person (as great as Wayne is).
With community ownership comes community responsibility and a community voice. Our future is theirs and will be shaped by a shared vision. That possibility is exciting for us given so much about business in our society is about the views of the few at the expense of the many.
We received a grant from a women’s giving circle to prepare for our investment raise and got the green light from our landlord, so it was on! We then spent a good eight weeks preparing for the campaign – the first of its kind to launch in Queensland. We were the guinea pigs in a giant experiment it seemed.
The journey has been a rollercoaster ride– dizzying, exhilarating, scary and sometimes exhausting. Here are a few of the takeaways from the past few weeks:
Activating your crowd is everything
We are lucky to have an incredibly engaged community and for over 13 years, we feel that we’ve been campaigning on a lot of levels for food systems change. However, we needed to spend more focused time activating our crowd of supporters on the specifics of this campaign prior to the launch.
We were so busy setting up a new company, and preparing the offer, that we didn’t spend enough time preparing our crowd. In hindsight, the first 30 days of the campaign were really spent priming the crowd, so it was a welcome relief when the Board agreed to take advantage of the time extensions allowed under ASIC’s legislation. This has allowed us to refocus, negotiate new leases and improve the business case for investment, and further activate our crowd.
Being first can be a blessing and a curse
Equity crowdfunding is new in Australia and, as I said, we were the first to do a campaign in Queensland. In hindsight, there is much to be learned from being the pioneers. I’m sure other campaigns will greatly benefit from our experience. What we discovered is that there needs to be more education around a campaign when it’s an equity crowdfunding campaign. Investors, both established and new, are also new to this form of investment and the legislation is fresh off the press. There is a lot to take in and understand.
Aussies like a fair go but don’t like to take risks
When it comes to investments, Aussies are fairly conservative punters. We don’t like to take unnecessary risks. It could be the economic climate we’re in or it could just be culture. My guess is it’s a combination of the two.
To get a clear understanding of the motivations of this mindset would take too long to analyse, however, we do know that Australians value property as secure bet, over and above the dot com alternative investments out there. So what’s holding them back, when this is a property, in scarce industrial supply so close to the city?
My guess it’s not so much the property that’s the issue, it’s co-investing with a bunch of people you don’t know. But what we forget is that’s exactly what we’re doing with our Superannuation funds. Our fund managers just co-invest our super on behalf of thousands of other people like you and me. It’s just that we never get to meet those people in that context or have to trade shares with them face to face or in close proximity. The Food Connect Shed will mean a few hundred, perhaps a thousand people will need to make collective decisions about this place as a community – and we’re not traditionally good at that. It feels a bit uncomfortable or hard work or risky. Relationships, hey?
And that is the challenge I’m most looking forward to, because when all is said and done, we have all the solutions to address most of society’s problems right there, right now. What we don’t have is a way to collaborate that guarantees harmony and productivity at all times. That’s where the rubber hits the road and may cause some hesitation among potential investors.
Be clear on what’s for sale
Sometimes, it’s hard to get across exactly what investors are buying. In this case, a company that plans to buy a warehouse! Some of our crowd got confused that they were buying into the social enterprise Food Connect Pty Ltd, and not certain what they would get out of it, when really, this was a new company.
It’s a new company because to create a community-owned local food hub, we needed the entity to stand alone from the social enterprise and the not-for-profit, Food Connect Foundation. The new company would own the infrastructure that belonged to the food hub and rent out space to long term tenants and hire out venue and meeting areas to the public. Once this was made clear, we could define the perks that we could offer investors. Here’s a video we made to explain what investors will get if they pledge.
With equity crowdfunding legislation being so new to Australians, there was also a lot of confusion that the pledges were actually donations with a reward attached. This confusion comes from using the term ‘crowdfunding’ which is well known in Australia in terms of kickstarting a venture without an ownership stake. Equity crowdfunding actually means that you get real shares in a real company, meaning in this case you become a real property investor. So there was an additional education piece around that issue.
We could’ve chosen a more traditional path for investment, it’s true. However, our vision for a democratised food system requires us to find ways to share the risks and rewards with our community. Having the building owned by another wealthy landlord, would only mean perpetuating the dominant paradigm of the concentration of ownership, profits and power into the hands of a few. On the other side of the coin, convincing wealthy individuals to participate in a community-owned and shared project, required equally difficult conversations. The setting up of the Foundation Share – which holds voting rights over major decisions relating to the principles of the vision – was a barrier for some who normally see property as a commodity to be speculated on the market.
And, while some of these lessons have been hard, they’ve made us stronger and clearer.
It’s not over till…
Over the last couple of weeks of the campaign, we’re going grassroots and pulling in our team, friends, family and city cousins to make this dream a reality. We’re still in this 100 per cent. Why? Because we believe our future food system (and our kids and their kids) needs it. The climate change emergency means we need to organise our communities in totally different ways to meet the challenges ahead. The Food Connect Shed aims to do this and provide a prosperous and welcoming place in the process.
Are you in? We’d love you to join us on this exciting journey. Pledge today to get us over the line! If you’ve already pledged, it would be awesome if you shared this post, which we originally published on the Food Connect Shed blog.
About the author
Emma-Kate Rose has extensive skills in applied research, sessional lecturing, project management, event management and start-up enterprise development. She joined Food Connect as General Happiness Manager in 2011, coordinating a significant internal restructure, improving financial accountability and getting ‘investment-ready’ to scale impact.
The enterprise has led the way in transforming the local food system through paying farmers a fair price, employing marginalised people, and engaging over 60 volunteers around Brisbane to act as pick up points for customers. Focusing on ecological agriculture, family farms and strong local communities, Food Connect has developed its model over the last decade and open-sourced it's model with replications in cities and regions across Australia and New Zealand.
In May 2013, Emma-Kate became a Fellow of the Australian School for Social Entrepreneurs. She is currently Chair of Queensland Social Enterprise Council and is a contributing author to Fair Food, published by University of Queensland Press.
