TOO many cooks may spoil the broth, but the owner of an Edinburgh soup cafe hopes to get enough people on board to help fund its expansion plans as it becomes the latest firm to join the £15 billion “crowd-funding” revolution.
Elaine Mason, who opened Union of Genius in 2011, has turned to crowd-funding to raise £10,000 for a new commercial kitchen after being inundated with demand from other cafes in the city.
The firm supplies ten eateries, as well as its own cafe, but Mason told Scotland on Sunday the existing kitchen has reached “bursting capacity” and is having to turn away prospective clients.
She added: “Although I had a commercial kitchen in mind, I thought that would be three years down the line. But we’ve reached that stage already, purely because other cafes are getting in touch with us, asking to stock our soup, all through word of mouth.”
Union of Genius is using the Kickstarter website for its fund-raising drive. With one week left before the window closes, it has already received pledges worth almost £8,000.
Kickstarter is one of a growing number of crowd-funding platforms, and last week rival website Crowdcube, which has raised £5 million since launching two years ago, gained approval from the Financial Services Authority.
Seedrs, which is understood to be the only other crowd-funding website to be authorised by the City watchdog, has a different model: it holds shares in companies as a nominee and manages them on behalf of investors.
Co-founder and chief executive Jeff Lynn said: “The UK has no shortage of clever and determined entrepreneurs with great ideas for new businesses, and we are offering a wonderful new way for them to achieve the initial funding they need, with obvious benefits for the economy.”
Accounting firm Deloitte estimates the crowd-funding sector will help firms raise about £1.9bn this year.
The National Endowment for Science, Technology and the Arts predicts that figure could soar to about £15bn within five years.
The first national crowd-funding conference will be held in London at the end of this month, bringing together entrepreneurs and investors, along with speakers such as Matthew Fell, the CBI’s director for competitive markets.
Conference organiser Barry James, chief executive of technology firm AngelRevolutions, said: “With the banks in retreat, crowd-funding – and the way we handle and embrace it – could be crucial for the future for us all.”
Mason decided to turn to Kickstarter after realising that banks would have told her to “get lost” – the latest figures from the Bank of England show net lending to businesses shrank by £2.1bn in December.
She said the response from customers so far had been “amazing”. Depending on how much they pledge, backers could be rewarded with a free T-shirt or the chance to develop their own recipe. Those who provide £1,500 will get a lifetime’s supply of soup.
Union of Genius also runs a loyalty scheme. “We use compostable packaging from Vegware, so people earn points towards free soup when they bring packaging back to go into our composting system,” Mason said.