News

Cooking up success: when restaurants, cafes and pubs start using crowd finance.

June 20, 2016 • By TAB team



As if it's not challenging enough to deal with 8 major food allergens, restaurant, bar and cafe owners are often stuck looking for ways to finance new or expanding businesses. With many of these businesses turning to crowd finance, many questions arise on what's been funded and how, for instance:

As if it's not challenging enough to deal with 8 major food allergens, restaurant, bar and cafe owners are often stuck looking for ways to finance new or expanding businesses. With many of these businesses turning to crowd finance, many questions arise on what's been funded and how, for instance:

Does crowd finance provide funds to businesses like mine? Is lending, equity, rewards or even donations based fundraising the best way to go? Can I distinguish between successful and unsuccessful raises? Are there certain characteristics from successful raises that I need to adopt? At Crowdsurfer, we provide data intelligence to answer these and many other questions.

One common financing need has been for launching or expanding a bar, cafe or restaurant. Using the Crowdsurfer dashboard and with a specific focus on campaigns that successfully raised over $50,000 in the last 12 months, we identified 54 campaigns that gave us the following insight:

How much can I expect to raise from crowd finance?

The average raise of the 54 funded projects is $477,392. This is skewed substantially by the successful projects that raised over $1M. The median raise is $119,008. The full spread can be seen in the chart below.

Distribution of number of campaigns by raise size (USD)

Does funding type make a difference?

From the sample of 54 projects, the average and median raise for equity based crowdfunding stands out from the other funding types ($1,085,018 and $314,816 respectively). On the lower end of the scale, there is little difference between rewards (average $113,477 / median $67,808) and donations (average $131,238 / median $66,592). Lending sits in the middle with an average raise of $209,548 and a median raise of $133,600).

What were the campaign targets of these raises?

Of the 54 campaigns, 31 (57%), targeted a raise of between $50-100k. 7 (13%) targeted over $500k.

63% of the raises overfunded and 4% met their exact target. Interestingly, 31% raised less than their target amount. The reason for these campaigns still being considered successful is that some platforms allow you to keep what you get when you pass a minimum threshold.

Distribution of number of campaigns by target goal (USD)

How many backers should we expect?

The average number of backers is 427 and the median is 253. Chilango received the highest number of backers with 1,519.

What were the largest raises?

Below is a selection of the largest raises spanning different funding types.

Chilango

Equity campaign, $1.5M raised (UK)
Chilango is a chain of quick-service Mexican restaurants based in London. They were raising equity finance to open Chilango throughout the UK, and internationally.

Dabbous

Equity campaign, $4.4M raised (UK)
Dabbous is a Michelin starred restaurant and bar. They raised equity to turn the large waiting list into revenue by setting up a new restaurant in central London.

Taylor Street Baristas

Mini bond campaign, $2.8M raised (UK)
Taylor Street Baristas raised funds with a mini bond to open a further 10 shops. They also offered those who signed up dividend payments in coffee, tea and cake.

Let's build a pub

Rewards campaign, $446k raised (Australia)
Let's build a pub campaign raised $446k from 1,519 backers to re-build a pub that had been previously destroyed by a fire.

Het Lokaal

Loan campaign, $249k raised (Netherlands)
Het Lokal borrowed $249k to refurnish its shop where local products of the season can be bought and consumed.

B.E.A.T center

Donations campaign, $66.7k raised (US)
The B.E.A.T center launched a donation campaign to provide a commercial kitchen that will prepare meals for low income children and homebound seniors.

Take advantage of Crowdsurfer to research your own fundraise or to answer any other questions you have about crowd finance. Register here and access the most current and interactive data intelligence on the industry.