Kickstarter helping launch local eateries

Donut Cooperative is one of them

Harvest Moon offers garden design and consultation services and will even do the dirty work of raising edibles in their customers' yards. The pair are seeking $8,900 so they can offer garden coaching to low-income homeowners and create food-shelf gardens.

"It's not like we can't survive as a business without this," says Kountoupes. "We really feel passionate about social justice with food, and this is a part of the business we want to make happen."

"We're not a nonprofit," Leraas adds, "so we aren't eligible for traditional grants."

More than 150 backers helped Dawn Otwell and Jacob Schumack open Donut Cooperative
Benjamin Carter Grimes
More than 150 backers helped Dawn Otwell and Jacob Schumack open Donut Cooperative

Location Info

Map

The Donut Cooperative

2929 E. 25th St.
Minneapolis, MN 55406

Category: Restaurant > Bakery

Region: Seward/ Longfellow/ Minnehaha

Most of their backers—44 so far, and growing—are completely unknown to them; some don't even live in Minnesota. And many have given to other food-related projects. That's the beauty of Kickstarter, Kountoupes says. "It's like this cool underground movement, a community built around supporting and doing.'

Leraas compares Kickstarter to the community-supported agriculture mindset. "Especially as the economy stays bleak, people are realizing they need to get more creative," she says. "And they are thinking of economic relationships in different ways."

It's also marketing. "It's been an incredible way to get advertising in a community of people who are likeminded," Kountoupes says. "We may get clients out of this, even if they don't fund us."

KICKSTARTER CAN also be a lifeline for people outside the usual funding loop. Derrick Williams has been cooking soul food ever since he was a child in Arkansas. But since his restaurant, Derrick's Southern Style at 38th and Chicago in Minneapolis, closed last year, he's been a cook without a kitchen. He cooks for friends and sets up an occasional backyard barbecue, but mostly he says he is always thinking, "How can I get back to cooking every day?"

A friend convinced him to try Kickstarter as a way to raise $5,000 to get a meal-delivery service called Soul Food 2 Go up and running. Williams says he was skeptical—"It felt like begging"—but, without a lot of savings, he doesn't have access to many other funding streams. If the project funds, he plans to use produce from a cooperative of small local farmers to cook Southern classics and his own specialties, like smoked meatloaf. He wants to offer healthy options to a customer base prone to food-related diseases and expand options for people in the Twin Cities who love Southern cooking. "You just can't get certain things in the stores here," he says.

ANDY HAYES grew up in a restaurant family. His grandmother owned Stella's Café in downtown Monticello for more than 30 years. Now he's hoping to continue the family tradition by opening Hayes' Public House in Buffalo. He's got his eye on a building but needs to raise some capital so he'll be eligible for business loans.

Hayes says that using Kickstarter seemed strange at first, and he's had to explain the concept to some people, but the reception so far has been positive. With more than a month to go, 11 people have pledged more than $1,000. As the word spreads from close friends and family to the outer fringes of his social group, Hayes says he's been pleasantly surprised to see support from friends of friends and other acquaintances. While he was hoping to open the doors on St. Patrick's Day 2012, he now notes that the clock is ticking pretty fast. "There are people following me who have been really supportive," he says. "That means more to me than making my funding goal.

SO KICKSTARTER is about market-testing ideas, building enthusiastic communities around your project, and about access for nontraditional business owners, but it's also about cold hard cash, too. The money pledged is a gift, not a loan (Kickstarter explicitly forbids repayment of pledges) and backers don't get a stake in the business.

When Katie Johnson and Ryan Bloomstrom first approached banks about loans for Bloomy's Roast Beef, they were expecting to have to put up about 10 percent of the capital themselves. But bank loan practices aren't what they used to be, and the Small Business Association, which has approved their loan, wants entrepreneurs to put up 30 percent of every purchase. The couple turned to Kickstarter to bridge the gap between their savings and what the SBA wanted to see.

Other entrepreneurs might look for venture capital for that, but an investor would get a stake in the business and might want a say in how it was run. "We refused to give up our hard work, blood, and tears for a private investor," Bloomstrom says. "That's where Kickstarter comes in."

That is not to say that Kickstarter is an easy shortcut to business success. Johnson and Bloomstrom have a 65-page business plan to prove that. The couple has spent 10 months working on the plan. "We both have full-time jobs, and then we come home at night and open our laptops and keep working," Johnson says. That included shaking the Kickstarter bushes long before they had a crowd of backers to help them do that. Johnson said they did something every day to keep the ticker on their Kickstarter page growing, using Facebook, blogging, and old-fashioned email pleas.

The couple now have a busy five months ahead of them before they put their first roast in the oven. They'll be planning a launch party, hiring staff, and perfecting recipes for coleslaw, mac and cheese, and sandwiches. One thing they know for sure: At least 56 people are eager for a taste.

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4 comments
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I don't get it, it's not venture capitalism when you're not getting money back from a successful business. Kickstarter is more like business begging/charity.

 
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