When it launched in October, equity crowdfunding site EquityEats aimed to raise money for four new restaurants within 45 days. But two-and-a-half months after the launch, none of the projects have reached half of their goals, and two of them aren't only around 10 percent of the way there. EquityEats, which allows investors to earn profits, not just perks, has extended all of the campaigns—with 67 more days to go.
Granted, EquityEats founder Johann Moonesinghe set out with some lofty ambitions. The restaurants seeking funding through the platform—a bakery, a seafood counter, a lobster and burger joint, and a seasonally-focused American restaurant—are aiming to raise anywhere from $445,000 to $970,000. And despite EquityEats' initial intention to allow anyone to invest, only "accredited investors" with a net worth of $1 million or an income of at least $200,000 over the past two years can put in cash because of various legal and regulatory restrictions. (That could change: The Securities and Exchange Commission is in the process of writing rules for a new crowdfunding provision that will allow anyone to be an equity investor within certain limits.)
"We're not worried. We're optimistic, and we have to be," says Steve Lucas, EquityEats VP of strategy and communications. He points out that a lot of start-ups take some time to prove their model. "We're fairly young. ... Entrepreneurship in general is a process of planning and adopting."
Meanwhile, EquityEats doubled the size of its own staff in December to almost 10 employees and is working behind the scenes to figure out how to better connect with investors. "We're learning first-hand with our entrepreneurs and ourselves a lot of the challenges that restaurateurs face," Lucas says. "We're building an apparatus that will be able to change that eventually."
Part of the problem, Lucas says, is that people want to try the food and drinks before they invest in restaurants. A launch party at Doi Moi where the chefs prepared dishes for potential investors (and gave out live lobsters in the swag bags) gave them a small bump. But now the crowdfunding company is looking to get its restaurants involved in more pop-ups. Bluebird Bakery will pop-up at After Peacock Room on Jan. 25, and seafood counter Albright Special is also planning to host something soon. The restaurants are also hosting private dinners for potential investors.
But beyond that, EquityEats is actually looking to open up its own pop-up space where chefs and restaurateurs can show off their concepts to backers and the public on a regular basis. Lucas says they're hoping to secure a lease soon. "There aren't many spaces like this in the United States," Lucas says. "Ours would be the first one connected to a crowdfunding platform."
Read Y&H's initial column about EquityEats here.
Photo of the EquityEats team by Darrow Montgomery