What does Foodstart do?
FoodStart is a low-cost way for business owners in the food-and-beverage industry to raise capital in small increments online. However, they aren't buying equity. They're buying perks and rewards like discounts, free desserts, and guaranteed tables. For the business owner, the result is low-cost capital and a network of people who now have an incentive to see you succeed. For the backers, it's an easy way to support a new concept or a friend's business while receiving benefits they can't receive any other way.
Who is it for?
FoodStart.com is for anyone with a new or existing business that sells food or beverages. Examples include a restaurant raising money to redo their entrance, a startup brewing company in need of equipment, a food truck in need of a new set of wheels, a bakery which needs matching funds in order to qualify for an SBA loan, or a community food-growing coop in need of seeds. And, of course, it’s for anyone who loves food and wants to see great food made, sold (and financed!) locally.
Is there a threshhold requirement to raise funds? In other words, what if the funding goal isn't met?
For existing businesses which have been open for at least three months, there is no threshold requirement. When the campaign deadline ends, we will deposit whatever funds have been raised into your bank account. (We waive the threshold requirement since backers will still be able to receive their perks, even if that back deck or second location doesn't get built.)
For new businesses we require that the campaign goal be reached before releasing funds. (This is to protect backers who need confidence the project will get off the ground so they will be able to redeem their perks and rewards.)
Why support a local restaurant or brewery or food company?
Restaurants make our cities better. Yes, we’re an internet company but in an age dominated by social media, screens, and smartphones, we still need places to get together in person. Perhaps now more than ever.
How much does it cost?
It’s free to start a campaign on FoodStart.com. Assuming your funding goals are reached, Foodstart.com charges a 4% processing fee. Here is how the math works. Say your campaign raises it’s target goal of $100.4% or $4 goes to FoodStart.com. About 2.9% or $2.90 goes to our credit card processing company, Amazon.com which means leaves $93.10 goes into the bank account of your new business. So if you need to raise exactly $100, we recommend setting a goal that is slightly higher to cover the costs.
How that compares?
The short answer is that FoodStart compares very well…
- a loan from a local bank: assuming they'll even lend to you, expect to pay 6 to 12% in annual interest. And trying paying Bank of America in free dessert!
- a merchant-cash advance: 22-30% of gross credit card receipts.
- a cash advance on a credit card: 20%+ - unless you pay it off right away.
What if I have a question for the business owner after I make an investment?
FoodStart.com believes strongly that an engaged community is essential for making our businesses partners successful; So yes, please contact the owner directly with the contact information you receive after investing or post a question through the owner’s blog.
How do I get on the homepage?
Think you have a great project that should be promoted nationwide? Send us an email by visiting our Contact Us page.
Can I stop my campaign before it has concluded?
You can cancel your campaign if no one has backed it yet. But if folks have already made contributions, then it has to stay up for the duration of the the campaign. That said, if you have some super compelling reason,send us an email by visiting our Contact Us page and we'll discuss it.
How do I start a campaign?
As long as you’re involved in the Food and Beverage industry, have a bank account, and a working phone number, you can start a campaign. Click here to get started.
What if I don’t reach my funding goal?
Well, hopefully this won't happen.That's why we urge you to promote your project via social media right from the beginning. While casual visitors to Foodstart might invest in your concept, most will be people you have some direct or indirect relationship with. So upload updates. Send out Tweets. Post on Facebook. Whatever it takes! Even if they don't back your project, you're still building buzz.
Does FoodStart own part of my food business? What about the backers?
No. We all want to see you succeed, but neither Foodstart nor its users own any actual shares in your business. Our research shows that rather than a cash return, backers prefer non-cash rewards and perks. Which makes sense. If you put a $100 in a friend's restaurant and received an 8% return, that's $8 a year. But instead, if you received a discount on food and a free dessert when you came in, well, that's something.
Does FoodStart screen projects before they launch?
We do have certain minimum requirements that campaigns must adhere to. For example, we only work with businesses in the food and beverage industry. We are not, however, an investment advisor so if you have questions about the business, you'll need to contact the owners directly.
Do owners have a legal commitment to honor their perks?
Yes. According to our Terms and Conditions, perk promises must be honored in good faith. We say “good faith” because sometimes circumstances change - for example, a restaurant decides to stop offering brunch, and therefore the promise of a free mimosa on Sunday mornings doesn’t apply any longer. In those cases, owners are required to offer a perk or similar or greater value.
No small business owner wants to create enemies so if you feel the owner hasn’t stepped up, contact them directly and, if necessary, remind them of their legal obligation.
What about fraud or failure to follow through with actually executing the project?
While FoodStart does perform random, on-the-ground audits to check for fraud, it's up to business owners to fulfill their promises to investors and up to investors to determine whether owners can execute the campaigns they help fund.
What if the business is running into problems?
When it comes to all small businesses, even the best ideas run into unexpected issues.Savvy restaurateurs, however, will rely on the contacts, ideas, and energy of their investors so we encourage them to reach out and post updates on their blog; after all, everyone has the same incentive to see the business succeed!
That said, some problems are insurmountable. In those instances, business owners have the choice of how to fulfill their obligation to their investors. That might mean transferring perks to another restaurant, a refund, or a long, written apology and sorrow-filled explanation about what went wrong.
Can FoodStart refund the money if a project reaches its threshold but is unable to deliver?
No. FoodStart doesn’t issue refunds. As a practical matter, we never actually hold the funds ourselves; when the campaign deadline is reached, Amazon Payments charges your credit card and distributes funds directly to the business’ bank account. If for some reason the business owner needs to issue a refund, Amazon Payments allows a chargeback for the first 60 days after the initial transaction. After 60 days, the owner will need to initiate a separate transfer payment to the investor via Amazon Payments, Paypal, or some other mechanism.
Aren’t restaurants terrible businesses? Why should I invest in one?
Restaurants are indeed risky businesses. However, restaurants are not as horrible as people assume. According to a University of Ohio longitudinal study, the three-year failure rate is 57% (26% the first year, 19% the second, 14% the third.); 57% is almost twice the failure rate of most startups, but still less than the 90% commonly assumed. And though too soon to tell for sure, we expect the success rate of our business partners to be significantly higher than industry averages because of the unique way FoodStart aligns customer and owner incentives.
Perhaps more importantly, our owners aren’t offering backers equity in their businesses. Not only would it be difficult for them to manage so many actual shareholders but also there isn’t much of an ‘exit’ for investors – restaurants rarely go acquired or go public. Instead, owners of food and beverage businesses can offer great perks - everything from recognition from the owners and chefs, insider updates, private reservation phone lines, tasting parties of new menu items - that you can’t get any other way. And that’s the reason we didn’t do dentalpracticestart.com - no one really wants dental care, even at a discount!
How can I edit my profile?
Log in to Foodstart and click on your name in the upper right of the page, then click on "Edit Profile".
How to I change the emails I keep getting?
Log in to Foodstart and click on your name in the upper right of the page, then click on "Notifications".
How do I recover a lost password?
Visit this page.
Can I log in with my Facebook account?
You can use your usual Facebook login in at the “login” page on the front page.
Why is my Facebook account showing up as somebody else
Someone else was probably using the same computer. Go to Facebook.com, logout, and login again with your usual username and password.
Is it a good idea to login with Facebook?
Absoluately. If you are a business owner, your social network will be critical to raising funds. If you’re an investor, Facebook is a great way to show off your new investment and get others involved.
What is Facebook Connect?
Facebook Connect links your Facebook account to your FoodStart account. Foodstart uses the email you use for Facebook so you don’t have to create and remember additional passwords.
How do I delete my account?
Accounts can be deleted from your login page.
Is FoodStart.com available internationally?
For now, FoodStart.com only serves businesses in the United States and Canada. And funds are deposited in U.S. dollars only. Interested in partnering with us internationally? Please visit our Contact Us page.
Are contributions tax-deductible?
Usually not. That said, nonprofit food ventures also use FoodStart and will provide information on tax deductibility information directly to investors.
How can I contact FoodStart?
Visit our Contact Us page.
Can I download the FoodStart logo?
Yes! It isn’t trademarked. Visit oour “Marketing Kit” section for more different sizes and styles.