Investment in vegan businesses is increasing these days. The traditional method most business owners follow is known as bootstrapping which is the process of building your business from your savings. Once you start making sales the money that starts coming in, you recycle it back into the business.
When you see companies such as Beyond Meat and Oatly use investment money to scale their business globally and be valued in the billions; that option can be used by other vegan businesses to follow in their footsteps to start raising capital.
Vegan angel investors
Angel investors are high net-worth individuals who invest in businesses at an early stage. It’s people that use their fortune to make another company grow. In exchange for their investment, they get an equity percentage in a business.
For an angel to invest in a business, they must meet certain financial requirements that allow them to make riskier investments. The general rule is that the individual must have a net worth of over USD 1,000,000, excluding their primary residence, or meet other income requirements, such as an income of more than USD 200,000 per year in the US.
Angel investors can be found in your local community, networking on LinkedIn, and browsing through an Angel List or Syndicate Group. A syndicate is a group of angel investors who come together to invest in a project or fund.
To approach them one must have validated their business with their own money, as well as money from family and friends. Once they show that their vegan product is accepted in the marketplace, angel investors come in and help jumpstart to the next stage of their business before approaching venture capital funds down the road.
Vegan investment platforms and funds
How to get investment? Venture capital funds are usually firms that typically invest in early-stage high growth potential businesses. While many typical VC firms may invest in vegan businesses based only on the numbers, others invest in the idea.
Here are some venture capital funds that focus on plant-based and sustainable ventures:
- Blue Horizon
- CapitalV
- Veg Capital
- Kale United
- Plantbase
- VegInvest
- Unovis Asset Management
- Dismatrix
Another methodology these days used by start-ups is by equity crowdfunding platforms. They open an opportunity to the common guy. Instead of raising a lot of money from a small group of investors, crowdfunding allows businesses to raise small amounts per person from a large group of people who believe in the projects they invest in.
The equity crowdfunding platform Seedrs allows non-accredited investors from the EU and UK to invest as little as €10 in a startup each. While this may not seem like a lot, the plant-based meal delivery company Allplants raised €4,503,887 from 1,857 investors in just a couple of months.
In the US, the all-vegan supermarket Vegan Fine Foods raised $711,381 from 1,364 investors on the crowdfunding platform WeFunder. Other crowdfunding platforms include StartEngine and Republic.
One of the newest platforms out there is VeganLaunch, which is a niche platform dedicated entirely to raising money for vegan businesses.
Direct and initial public offerings
Last on the list is when a business owner wants to take their company public on the stock exchange market. In 2019, Beyond Meat went on to launch one of the most successful IPOs in history. Going public at a $1.5 billion valuation, it eventually grew to be worth more than $13 billion within three months of its IPO date.
These were a few samples of the routes vegan businesses can take to get funding. It’s important to remember that while the thought of getting capital is appealing, you do have the responsibility of handling other people’s money, where if your business fails, they could lose 100% of their investment.
