How crowdfunding and social responsibility saved a business

Meet the Brisbane entrepreneurs who turned their ethical approach to business into a strategic advantage.

Food Connect

Meet the Brisbane entrepreneurs who turned their ethical approach to business into a strategic advantage.

[HEADLINE ] 

How crowdfunding and social responsibility saved a business

[STANDFIRST] 

Meet the Brisbane entrepreneurs who turned their ethical approach to business into a strategic advantage.

[BYLINE]

William Holmes

[BRAND INTRO]

We’ve teamed up with Griffith University’s Yunus Social Business Centre to learn more about the changing face of commerce.

[BRAND OUTRO]

Learn more about the Yunus Social Business Centre here. 

As the clock ticked down on a 2018 crowdfunding attempt to save Food Connect, the company Emma-Kate Rose runs with her partner Rob Pekin, they could see in real time whether their dream was about to evaporate.

That dream was to deliver seasonal, ethically sourced boxes of fruit and veg and other produce from local farmers – who were paid a living wage for their wares – to homes in Brisbane and on the Gold Coast.

Food Connect was at risk due to complications with real estate. Essentially, the warehouse shed they'd been renting for more than a decade was to be sold. They could take a risk and stay, in the hope a new owner wouldn't move them on, or secure the business's immediate future by inviting "careholders" to invest via the Pledge Me crowdfunding platform, thus allowing them to buy the warehouse.

The target was $2 million, and the shed's owner gave them a year to try and raise the money.

“Serendipitously, at that time, [new] crowdfunding legislation came into play,” Rose says.

Although Rose and Pekin had been talking to “impact investors”, who back socially aware businesses, the 2017 crowdfunding laws allowed the pair to open Food Connect to hundreds of small investors who believed in their mission.

A launch party at the shed attracted 200 people and a flurry of initial investment.

“The first week was really good,” Rose says, “and then we realised [a] barrier around equity crowdfunding was that people didn't really understand what it was ... and we lost a bit of momentum.

“ASIC [the Australian Securities and Investments Commission] allowed us an extension. November 21st was the cut-off date and on the last day we were at $1.2 million in the morning. We were resigned to the fact we weren't going to get there.”

The laws state that if you don't hit your target, then you don't get a penny of what has been pledged.

“We tried to convince ASIC to let us drop the [target] amount to $1.2 million, but we got a big ‘No’ at 3pm,” Rose says. “Then our landlord rang and said ‘I'm going to chuck 150 [thousand] in, and someone read a Courier-Mail article that morning and chucked 100 [thousand] in, and we had two investors who we'd been on the phone to for three months, and they ended up chucking the rest in. By 5.30pm we had hit $2 million.”

Food Connect is at the vanguard of a burgeoning movement of socially and environmentally responsible business practices. For example, Food Connect's owner or general manager can't earn more than double the lowest paid person in the organisation.

“It’s kept us sustainable and been a bit of a filter as well, as people who are genuinely interested in our vision and mission come to us looking for work,” Rose says.

Food Connect linked with Pledge Me via the Entrepreneurs in Residence program at Griffith University's Yunus Social Business Centre.

“I was one of four social entrepreneurs in residence, and the idea was to bring a project you're working on in your business,” says Rose. “It was good timing for me, so I chose to use the equity crowdfunding campaign as my project. It was great because it allowed me to tap into the university's resources through the film school, the Policy Innovation Hub and the Business School.”

Alex Hannant is the director of Yunus Social Business Centre, which leads Griffith University's research, teaching and engagement in the field of social innovation, entrepreneurship and enterprise. He says there is “huge growth in impact investment”.

“It’s not giving money away: it needs to have a social and environmental return alongside a financial one,” Hannant  says. 

“What we're starting to see is not just a niche thing. Mainstream financial institutions and funds are becoming conscious that the deployment of capital has to, at a minimum, do no harm, and preferably actually start to contribute to society.”

Hannant believes over the next 10 to 20 years there will be “quite a radical change in the way we think about capital markets, and the way we think about values”.

“There seems to be a bit of a renaissance in cooperatives, with more people having ownership and a democratic say. At the moment we're starting to see the movement to create something called a B-company, which is basically a new business form which looks and smells like a business, but has a social purpose hardwired into its constitution.”

Although a community-focused organisation such as Food Connect is not designed to compete with big business, Hannant argues the growth in grassroots organisations plays a role in bringing corporates to the table.

“One of the powerful things about social enterprises like Food Connect is that they may only stay at a certain scale of operations ... but they lead the line, and they set the example of what business could and should be. The more stories we have of Food Connect or Vanguard Laundry [Service], the more they start to shift people's optimism and expectations.”