Herdfunding: how the internet is raising money for farms
by Jodi Helmer, theguardian.com
Instead of approaching banks, small, local farms are finding cash and loyal fans online
09.27 EDT Last modified on Tuesday 19 April 2016 09.42 EDT
When Micha and Andrew Ide started Bright Ide Acres, a farm producing ethical eggs and meat in Snohomish, Washington, in 2012, the couple bootstrapped their startup costs.
Raiding their savings accounts, they leased a 12-acre parcel of land, installed fencing and purchased chickens, sheep, goats, pigs and turkeys. The couple began raising turkey breeds that were too heavy to fly, but demand grew for heritage turkeys which are flightly, and the birds started escaping from their portable electric fencing into other farmers’ vegetables fields.
“We didn’t want to switch to an indoor production model but we couldn’t let them keep getting out,” says Micha Ide. “It was either find a solution and raise the money or stop raising turkeys.”
The couple designed a “turkey tunnel” that provides enough space for their flock of 100 heritage turkeys to roost, forage and explore. It has a roof that keeps them safe from predators and out of the vegetables. The tunnel can be hooked up to a winch and moved to fresh pasture, allowing the turkeys to graze. But, at $4,000 (£2,800), it wasn’t something the Ides could fund from their savings account.
Instead of approaching the bank for a loan, however, they turned to the internet, raising nearly $4,980 (and counting) through a crowdfunding campaign on Barnraiser, a platform designed to connect farmers and food entrepreneurs to backers. With a few days to go until the campaign closes, the couple is thrilled that 60 backers have stepped up to support them.
“We’ve had so many of our current customers contribute, which blew me away because they’re already paying for our meat and the fact that they’re willing to pay more to support the farm is amazing,” says Micha.
Miche Ide: ‘It was find a backer or stop raising turkeys.’ Photograph: Tom Marks
Crowdfunding platforms such as Kickstarter, Indiegogo, Barnraiser and GoFundMe allow creators to post profiles of their projects online and seek funding from backers to bring the projects to life. To acknowledge their support, farmers offer rewards that can range from T-shirts and produce to farm tours.
More than $34bn in financing was raised through crowdfunding in 2015 via 1,250 active crowdfunding platforms worldwide, according to data from research firm Massolution.
While crowdfunding has long been the provenance of writers, filmmakers and other creatives, a growing number of farmers are turning to it to support sustainable agriculture projects.
“We hear about farmers getting older and farms disappearing or getting taken over by Big Ag,” says Terry Romero, outreach lead at Kickstarter. “Crowdfunding is the opposite to that. It gives people the opportunity to support small, local, family farms in a very tangible way.”
Kickstarter doesn’t track the number of farmers who have launched crowdfunding campaigns, but reports that 19,064 projects in the food category have been launched since the platform’s inception in 2009. Currently, a search for “farm” turns up 1,871 campaigns on the site.
According to Barnraiser, which was founded in 2015, some 40% of campaigns on the platform are farm-related and generate an average of $9,000.
While bank loans can bring in funds – assuming farmers can show sales and assets to qualify, which is often challenging for small farms or new farmers – they don’t guarantee customer support. Crowdfunding builds customer support into the model. “It’s great for building direct-to-consumer relationships,” says Eileen Gordon, founder and CEO of Barnraiser.
Entrepreneur Mike Salguero came up with the idea to partner with ranches producing grass-fed beef to start a monthly subscription service called ButcherBox. He turned to Kickstarter to test the idea. “I loved it but I wasn’t sure it was a service other people would use,” he says.
Mike Salguero: ‘The concept gives farmers exposure to a national market.’ Photograph: Danny Hoshino
Last September, ButcherBox launched a Kickstarter campaign with a goal of $25,000. For a contribution of $119, backers were promised one ButcherBox filled with beef; those who contributed $1,399 or more received a one-year subscription of monthly meat deliveries.
Salguero knew that the number of backers would correlate to consumer interest in the idea; during the 30-day campaign, 1,155 backers contributed $210,203. “It was very clear we struck a nerve and there was a huge demand for this,” he says.
In the last six months, ButcherBox has added organic chicken and pastured pork to its subscription offerings, partnering with four farms to ship boxes of meat to customers nationwide.
“The farmers were very excited about the concept because it gives them exposure to a national market,” says Salguero. “Farmers have a lot of cash tied up in raising animals [and crops] and there’s no guarantee of a market; crowdfunding changes that. It’s one of the reasons it’s going to continue growing and becoming more interesting for farm and food projects.”
Read more great features from The Guardian