Crowdfooding is based right in the heart of Canary Wharf, precisely on Level 39 of One Canada Square – a modern technology accelerator space, boasting the most dynamic startups in finance, tech and cyber security. London is where Alessio D’Antino’s journey began in 2007. Still at University in Italy, he came over for the summer and dabbled in the London bar scene. This experience sparked his curiosity for travel and intercultural encounters, leading him to South Korea in 2009 as an exchange student. After completing his degree Alessio went on to work for Diageo, back in Italy. Within a year, he was offered a permanent position, which he refused and chose instead to go to San Francisco to work for start-up accelerator, Mind The Bridge. Now CEO and Co-founder of Crowdfooding, we caught up with Alessio to hear how he made it to where he is today…
Getting to Know Alessio
What made you decide to come back to London after all these years?
I returned to Europe last year when I was looking at building Crowdfooding and making it a certified enterprise. Little by little, I started realizing that the scene in the UK, and London in particular as far as food is concerned, was very vibrant. Both for the amount of companies that were entering the space, as well as the amount of investors that were using crowdfunding platforms.
Have you always wanted to build your own business?
Yes, always. My parents were not entrepreneurs themselves, one was an architect and the other was a lawyer, but since I was 17 or 18 I started my own businesses. I failed multiple times, and I am very proud of it! I tried to create a business with stickers for laptops, using the Apple logo. I also did other minor things like selling T-shirts with DJ’s signatures… those kinds of things, but it never went too far.
“I failed multiple times and I am very proud of it!”
Where did the idea of Crowdfooding come from?
Crowdfooding started while I was in San Francisco, helping a bunch of tech companies with their marketing efforts as well as building strategic partnerships with other business accelerators. I realized that there was a huge food movement starting. The idea of building Crowdfooding started from understanding the struggles that most of the food entrepreneurs went through when it came to raising funds. One of the main reasons was that investors that were usually investing in technology, were becoming more inclined to invest in food, but they didn’t really understand the dynamics of food businesses. As a result, it was very hard for food entrepreneurs to identify suitable investors.
How did you start building Crowdfooding?
It all started back in San Francisco, in November 2014. We decided to build a product that was useful for entrepreneurs. We launched an online directory of the most active investors in the food space, that was built by connecting different sets of APIs (Application Programming Interface) from different investing platforms, and catering those to food entrepreneurs.
Who is your other business partner?
I have two partners. We met in San Francisco. They are serial entrepreneurs and have built multiple businesses in the food space. They knew the struggle and determination required to build a food business; they brought one of their food retail chains, a sushi restaurant, to a point where they had 34 stores, which they then sold. They were already building an ecosystem behind their businesses. Now they operate in the profit and non-for-profit sectors. One of their strongholds is a non-for-profit organisation called The Future Food Institute, which was devised by them in 2014 and incorporates a higher education program for food entrepreneurs called the Food Innovation Program.
Crowdfooding fits well within their whole ecosystem. They brought a wealth of experience, in terms of branding a business and building it from scratch and I brought a business development mindset and startup experience to the table. We then realised that the UK was actually a very interesting market and moved back to Europe last December. We started analysing the market and understanding all the investment schemes. It was clear that it was the best place to start Crowdfooding.
Are these investment schemes very different in comparison to the US?
Yes. First of all, in the US they don’t have an investment scheme like EIS or SEIS. The Enterprise Investment Scheme (EIS) is designed to help smaller higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies. Secondly the checks that you can cut off, when it comes to investing in companies on crowdfunding platforms are higher in the US than they are in the UK.
Here you can invest as little as £10, whereas in the US you won’t find a company that will allow you to buy equity for usually less than $3,000. Also, the structure of the company as far as the share structure is concerned, is very different. In the US it is not common to issue different classes of shares. In the UK you can break those down and issue different types of shares, like share A or share B. Those B shares usually don’t have any voting rights attached to them; they just have facial value. That’s the reason why you can invest as little as £10, because you will get access to a secondary kind of share.
“Startups will play a crucial role in what the world will be eating in the next 5 to 10 years”
What are the basic requirements for the companies that you evaluate?
At this point we are evaluating companies that are based in the UK or that have a permanent base here. The other criteria is being eligible for the EIS and SEIS scheme. Companies who aren’t eligible will be less appealing to investors compared to the ones that are. Other than that, experience of the entrepreneurs and the team is something that we look for, but it’s hard to predetermine because it’s a deal-by-deal assessment.
The food and beverage sector seems to be experiencing a huge shift at the moment. Why is that?
The first reason is that the barriers to getting into this business have become lower. I think technology enabled this transition and this new way of creating food enterprises. There are a variety of opportunities that you have when it comes to creating new foods, by using technologies that are now more mainstream than they have ever been. Startups will play a crucial role in what the world will be eating in the next 5 to 10 years, just because they are much faster at innovating and most of the time they are actually addressing some of the biggest issues that are affecting the food system.
Start-ups have a much deeper sense of what consumers need. Big corporations started realizing that consumers’ tastes were shifting a lot and so they started chasing after these new trends, but again given their structure it takes them a lot of time to create solutions for those needs. Start-ups will eventually collaborate with big corporations more and more. A lot of big companies are actually developing programs to work with startups, as well as accelerators. Diageo has a venture arm that is used both to invest and help companies build new products in the spirits sphere. Unilever, through The Foundry, is having an impact on exploring new ways to collaborate with startups.
In what ways is Crowdfooding helping investors?
Within our platform we built an algorithm that does matchmaking. The algorithm basically shortlists investment opportunities for financiers based on their investment thesis which is composed of their expertise in the companies that they have already invested in and the areas that they are interested in investing in.
What are you bringing to the start-ups?
We want to become a hybrid in terms of the service we will provide to the market. We understand food startups’ struggle and that they will have different needs throughout the development of their company in terms of raising funds. We want to create different crowdfunding services for them that will meet their needs. If they need growth capital, then they may take the avenue of doing an equity round.
If they need to test a new product that they just developed, then they may take the reward avenue. As of our launch this month, we will put a threshold of a minimum investment of 500£ to access equity. This threshold will be set alongside the entrepreneurs. Under this threshold investors will be able to access specific sets of rewards determined by each company.
Did you seek funding to build the company?
Yes. We closed our first round a couple of months ago. In the US we were also heavily involved in fundraising from the beginning, but decided not to take any money from US investors. We may consider it when we embark on our expansion.
How does your business model work?
We will be charging an investor management fee of 2% of any amount they will invest on the platform. They can still do window-shopping for free. We believe it is reasonable, given that they are the ones with the most money. The companies will pay a one-off fee of 1500£ to 2500£, that will cover expenses for running the due diligence on the company and all costs related to setting up the campaign as well.
How do you differentiate yourselves from other platforms?
Along with the algorithm, we have an investment committee that is composed of top-notch professionals who serve the purpose of evaluating and selecting the investment deals for us. We are not like Kickstarter, where you just go and create your fundraising campaign. We select the companies to make sure that there are good deals for investors. Within these individuals we have a venture capitalist, a business analyst, along with a food technologist, a CPG (Consumer Packaged Goods) expert and a nutritionist. It’s very broad, but we think it’s needed to create the most value for the investor community. The knowledge gap in understanding this business is very wide. The investment committee will help to bridge this gap by providing their expertise to both startup founders and investors.
“Crowdfooding started from understanding the struggles that most of the food entrepreneurs went through when it came to raising funds.”
Are there other existing platforms specialized in food and drinks competing against you?
Not quite. Seedrs and Crowdcube have a good number of deals in the food and beverage space, because in the UK there are many start-ups navigating this sector. There is a company in the US that does something similar, with consumer-packaged goods in general though, so it’s not specifically food. Then there are some other crowdfunding platforms that specialize in restaurants with different kinds of models. We have never really seen one that is really focused on food and beverage. Which is good for us! We want to be the first one in the space. We believe nevertheless that the market is big enough for other companies looking to enter this space, and that the crowdfunding industry will become more and more specialized in the coming years.
What has been your biggest challenge?
Educating both parties has definitely been one of the biggest challenges thus far. The second one would be fundraising, as for any other company; it just takes quite a lot of time. Also finding good companies. We have received hundreds of applications and went through all of them. We want to make sure that the deals we provide investors are of the best quality possible. It takes a long time to validate these businesses and select the ones we think have the most potential. Moreover, it is not easy at all to find investors who really understand the food and beverage industry and its peculiar dynamics. At this point it’s a relatively new market. You don’t have a lot of data to play with, but we believe that by combining a pool of experts who have done multiple investments in this space, along with people who are really passionate about contributing to the success of these companies, we can then find a good balance.
What are your criteria to evaluate these parties?
Each of the members of the investment committee have their own scorecards, which depend on the areas of the business they are evaluating. We look at everything from finance, all the way to market analysis, the competitive landscape, the composition of the team, how many years of experience the entrepreneurs have had etc.
“Failure is good because it makes you learn so much.”
Rebel Wrap Up
What advice would you give to someone wanting to start his or her own company?
My biggest advice is don’t be afraid to fail. It is still one of the things that in Europe we need to work on, compared to the US, especially how we approach entrepreneurship. Failure is good because it makes you learn so much.
Secondly, doing one piece at a time. Instead of envisioning the future of a specific business or business idea into a very detailed kind of vision, I think it is much more valuable to do interviews with people or friends or whoever would want to use your product. You then go back and validate each piece of the product making sure that is actually meaningful for other individuals, based on the feedback and insight that you get, rather than envision your idea in a very detailed and inflexible way. This also comes back to one of the biggest concerns we entrepreneurs in Europe have, which is being afraid of people stealing our ideas. It doesn’t matter at all, because your idea is worth a small fraction of the whole business, the rest is pure execution. When it comes to starting a company and building a business behind it, what really matters is how you execute the idea into a product, rather than protect it.
“What really matters is how you execute the idea into a product, rather than protect it.”