Sometime last year, as Bhakti Chai continued to grow and founder Brook Eddy knew that she’d have to fund that growth ($800,000 was her goal), she figured she wouldn’t have much trouble finding angel investors in Boulder, Colo., where the company is based.
But when she’d started to exhaust options in her own backyard, she stumbled upon the idea of crowdfunding — the accumulation of contributions from a number of parties — via CircleUp, a leading online platform in equity-based crowdfunding.
While the idea of continuing to work with local investors was appealing, it was topped by CircleUp’s proposition: working with a number of investors from across the country, including industry leaders who could offer not just investment, but mentorship.
Even though Boulder is one of the country’s touchpoints for the natural products industry, and is rife with potential mentors, crowdfunding allowed Eddy to get a wider assortment of investors. And after raising about $350,000 in 2010 and another $500,000 in 2013, she said she wanted to find new options outside of Boulder for the additional $300,000.
“I felt like I kind of had tapped people that I knew over the last three years already,” she said.
For some startups, crowdfunding serves as one of the only ways to raise capital in a time of need. However, Eddy’s case proves that crowdfunding can also work for entrepreneurs who have already exhausted their local options — even when those options exist in an innovation hotbed like Boulder.
And while Eddy knew about CircleUp’s ability to raise capital from a national pool of angel investors, she said that the willingness of CEOs and other executives to serve as mentors was “an added benefit” and a pleasant surprise.
In the video above, Eddy talks about her experience with the crowdfunding process and how it’s enabled her to keep pace with the financial obligations of her growing business, which makes an assortment of chai-based beverages.
She said that CircleUp began the working relationship by engaging in a lengthy vetting process, which traced the company’s roots, mission and financial information. This process prepared Bhakti Chai for the platform’s investor network and the eventual phone calls and paperwork. For some companies, giving up equity is akin to relinquishing the first born. For Eddy, she figured that giving up equity was a “necessity.”
“To be the brand we want to be and have the new product innovation that we want to do, we needed the growth capital,” she said.
With access to the capital, Eddy said that she was able to make some senior hires and build out her management team. She recently brought on a VP of sales and a business manager. Bhakti Chai has its own manufacturing facility and brewery, so she also wanted to further invest in bottling automation and production.
“In the food and beverage space particularly, there’s a lot of obstacles for growth,” Eddy said.
Many CPG entrepreneurs know that part. Eddy eventually decided to crowd-surf over them.