Access to capital is one of the biggest obstacles that many small businesses face. We see the frustration that entrepreneurs go through when their companies are growing, yet they can’t get more money to fund that growth. I read an article recently about a company (not in the PCV network) that felt similar growing pains, so they got creative with their fundraising.
California-based company Episencial produces non-toxic children’s bath and body products. Its founder Kim Walls says that the brand was growing steadily and hitting milestones, finding success in natural retailers and in hospitals – a unique distribution model that established quick credibility and a loyal following. But, like so many small businesses, Episencial had a problem managing their growth. “Banks won’t invest in a company [in our industry] because you have to keep a different cash-flow profile,” Walls says. As Episencial’s inventory demands were about to exceed the company’s ability to keep up, Walls found opportunity with a new crowdfunding website: CircleUp.
Many people are saying that crowdfunding is the “next generation” in small business capital. CircleUp co-founder Ryan Caldbeck says, “There are hundreds of private equity firms that invest in consumer businesses but almost none of them will invest in small consumer companies with less than $10 million in revenue. I saw a lot of phenomenal national brands that still struggled to raise money.” CircleUp has managed to provide an online crowdfunding platform focused on natural and organic brands with a community of accredited investors, which mitigates some of the risks associated with earlier crowdfunding sites. Caldbeck says CircleUp has found the most value in natural brands, which usually come with a distinctively passionate following.
Walls says that working with CircleUp has saved her hundreds of hours of time, and has provided her company with key investors who value her brand as well as her mission. Even after her round of funding closed, Walls has maintained relationships with investors that she met through CircleUp.
While crowdfunding isn’t for everyone, it’s certainly a way to get creative when looking to raise some money for a growing company. There are also organizations that are helping by offering loans specifically geared toward small businesses. PCV partner Working Solutions offers loans, and PCV recently launched our SAIL program, which is looking to give advised loans between $50,000 and $150,000. (For more information about SAIL, click here).
Hope that everyone is having a happy Monday!