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Crowdfunding in SA: Putting Your Money Where Your Mouth Is?


As one restaurant closes, others hope to open — and owners are looking to their would-be customers for help.

Crowfunding isn't new by any means. Indiegogo launched in 2008 and Kickstarter rolled through in 2009. Both have served as platforms where business owners, investors and the like can tap into their potential customer base to help make products and places a reality. And while some have steered toward the silly (potato salad festival), and others have impressively tanked by failing to follow through (i.e. the not so cool ice chest that left people waiting for months), there are currently 26 restaurant or food-based products on Kickstarter.

Locally, San Antonians have seen mixed results to tapping into their would-be audience. A San Antonio Cat Cafe gofundme has made just under $3,000 of their $20,000 goal as of press time. Mixtli's 2013 Garden Kickstarter raised less than $2,000 of its $6,000 goal. But not all have been flops. La Botanica's 2015 campaign hoped to raise $10,000 from the community. It raised $15,257 from 225 backers. Chef Mike Behrend and the folks behind Green Vegetarian Cuisine, held a 2015 fundraiser to help open Earth Burger in 2015. Their goal of $40,000 was surpassed by 302 backers to a grand total of $43,052.

For Behrend, who already owned two Green Vegetarian Cuisine locations when the Kickstarter was launched, the campaign helped build support for Earth Burger.

"We wanted to show people up front what we were doing and they were behind it, and felt invested," Behrend says.

And those investments paid off. Donors were gifted equal value perks and large donors received catered parties for them and their closest 15-20 friends. And the demographics varied. Plenty of San Antonians backed the Earth Burger Kickstarter, while other donations came through out of Chicago, California, and Indiana, from guests who had eaten at Green and no longer lived in the city.

Behrend also tapped into the community for a more practical reason.

"Banks hate the restaurant business. It's not easy to pitch a restaurant to a bank when they know most restaurants will fail," Behrend said.

The cushion has helped spur on growth for the brand, which will open a new store in San Marcos off Hopkins Street near Texas State University in June and another in San Antonio within the year.
Other companies are going that much further and bringing on investors, albeit without equity. Texas Zebo, the Limited Liability Company behind Halcyon/Stella Public House, recently launched and completed their own crowdsourcing campaign that beefed up the stakes. Halcyon, first launched in 2002 in Austin, later opened a location in San Antonio at Blue Star along with Stella Public House. Through Microventures, a new start-up partnering with Indiegogo, Texas Zebo raised $378,823 through 313 investors.

The campaign sought out investors to raise anywhere from $100,000 to $500,000. The capital would go toward plans to launch Halcyon Dallas on Greenville Avenue in February 2017 and flagship Halcyon and Stella Public House in Austin at the landmark Mueller Town Center in April 2017. The lowest tier investors could choose: $250. Levels from there increased to $500+, $2,500+, $5,000+, $10,000+, and $25,000 with perks increasing significantly per tier. A $250 investment meant an invitation to "special private parties, happy hours, and new tastings," while a $25,000 investment would yield perks like  "a VIP Card for 20 percent off all food and beverage for life, plus a $100 gift card (total of $200), plus the other $10,000 level and below perks" which include latte portraits, cocktails named in their honor, and a Halcyon Travel Mug with 10 percent off refills.

Big perks aside, Texas Zebo promised investors will see quarterly returns on their investments. A $10,000 investment, for example, would return $15,000 until the repayment amount of 1.5 times the investment is repaid. Not too shabby for helping restaurants open.

Using Microventures' sleek platform made sense for Kris Hardy, co-founder and managing partner of Texas Zebo.

"It's not crowd panhandling, it's a different venue," Hardy said over the phone. "Finding investors this way and going local was a way of finding people who know our brand and are excited about not only investing local but with someone local."

Investors were also keen to ask questions, such as a detailed breakdown of operating expenses, whether their personal math was correct, and which stores supported the cash being promised in return (all four Texas locations, not the San Diego one because it's part of a different LLC).

She mentions that while Texas Zebo is always on the lookout for major equity investors, the appeal of this type of fundraiser meant that once investors are paid out, they're also out of the company's hair. Microventures helped let smaller investors into the fun, who would otherwise not have a chance to participate.

At Pinch Boil House & Bia Bar, an upcoming concept from the guys who brought Vietnamese-style pop-ups to San Antonio, tapping into the community was an obvious choice. Founders Andrew Ho and Sean Wen are hoping to open their brick-and-mortar this summer. The 60-seat eatery will encompass 4,000 square feet at 124 Main Ave. near downtown's tech district.

"We know opening up downtown is tricky," Ho said. "We wanted people to know they're part of something cool and they'll receive benefits of value to them."

For their second round of crowdfunding (the first was a successful Indiegogo campaign that raised more than $20,000) , Ho and Wen are hoping diners will put their money where their mouths are. They launched the Pinch Founders Club, a three-tier funding system that guarantees donors twice their contribution. So $50 would net a $100 Pinch Gift Card, $99 a $200 gift card, or $199 for $400 worth of Pinch. So far, with 104 people contributing as "founders", they've raised $10,400 of their $15,000 goal.

"By nature people want to be part of a group. They can come see our culture, be a part of a team while helping downtown and people's palates expand," Ho said.

Christian Torres, a former Geekdom employee now at Chamoy Creative, lays claim to being the first person outside of Ho and Wen to taste Pinch's food. He's now part of the "Founders Club" after "investing" $99 earlier this week.

"We were at South by South West and they were catering a small party and I said, 'If you have anything leftover, let me know'," Torres said. Wen called him some hours later to offer him a taste. Torres has been hooked ever since; he says he's had the food more than 20 times now.

But it wasn't just the flavors — garlicky, sweet, spicy — that won him over. As  a 5-year resident of downtown, Torres' food options weren't always plentiful. He lists Murphy's Deli (now closed), Lula's Mexican Cafe, Oasis and Big Bob's (also closed) as joints he'd frequent while working in the Weston Centre.

"I understand the value and want to support. You can't complain there's no food downtown if you don't do your part," Torres said. "I'm doing it for selfish reasons. I want to put crawfish in my mouth."

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