School lunch firm tucks into crowdfunding
Equity crowdfunding is not just for startups and a 15-year-old company best known for its school tuck shops is seeking $1 million to expand its business and extend a free lunch scheme.
The Libelle Group will use the money to almost double its chain of 58 Champion tuck shops and to develop an app for Txt-My-Lunch, an online service that sends a prepurchased meal ticket to a child’s mobile phone, or direct to the school, to be redeemed for a lunch at the school canteen.
Chef and company owner Johannes Tietze said the business needed to make a significant investment in new technology and he liked the idea of using the Crowd88 platform to attract investors who supported Libelle’s commitment to healthy food.
‘‘It’s adding strength to the balance sheet, rather than a debt you have to pay back; the bank is never going to be as emotionally involved and attracted to the vision of making a difference.’’
As well as streamlining TxtMy-Lunch, Tietze said the app would make it much easier for corporates or individuals to gift lunches to needy students. The longer-term target was to provide 60,000 free lunches a month.
Alongside the crowdfunding launch early next month, Libelle will attempt to sell some of its existing shares to private investors, with the aim of raising $3.3m in total.
Crowd88 executive director Paul Hocking said this combination offering to wholesale and retail investors was becoming more common.
‘‘Vanilla offers of just going to the crowd are now becoming a little less the norm.’’
The sort of companies using crowdfunding ranged from tech sector newbies with a few staff, to those such as Libelle, which has close to 300 employees and revenue that is well established.
‘‘The legislation only allows for companies to raise up to $2m in any 12-month period, so they [the companies] are relatively small,’’ Hocking said.
Only a minority had a ‘‘social good’’ or sustainability aspect to them, but it did add to the attractiveness of the business as far as investors were concerned, and having a good business case was still the key.
Hocking said Crowd88 would generally steer clear of ‘‘pure’’ startups and would expect companies using its platform to report back to investors on a quarterly basis, and to take on an independent director to ensure good governance.
Snowball Effect has worked with 45 companies over the past 4.5 years and about 60 per cent of them were crowdfunded.
Chief executive Simeon Burnett said crowdfunding was an opportunity for staff to invest in the company they worked for and a simple way to raise capital from a broader audience. Hocking said: ‘‘There will be food and beverage companies – wineries and breweries – that have some sort of following after being in the market for three to five years, and like the idea of some of their customers coming on board.
‘‘It tends to be companies that either have some kind of consumer base they want to tap into, or they have some story they want to tell, so they can use it as a marketing tool.’’ Tietze is well aware of the marketing potential of getting public exposure through crowdfunding. ‘‘Even if people are not interested in investing [for the] mid to long term on this, how about sending someone a [free] lunch and investing that way? That lunch will end up in a belly tomorrow … There should be a spinoff, even if it’s only awareness that, ‘Hey, you can do this,’ ’’ Tietze said.