“We are thrilled to be partnered with Advantage Capital Partners,” which is a “perfect match for us” given ACP has a food and ag fund focused on business development in rural communities and Hip Chick Farms is based in the small but happening town of Sebastopol, Calif., said Serafina Palandech, who co-founded Hip Chick Farms with her wife and chef Jennifer Johnson.
The funds will help the young company meet the growing demand for its uniquely positioned natural, organic and certified humanely-raised frozen poultry products, including kid-friendly chicken fingers, chicken wings and meatballs, Palandech said.
“We have had a lot of distribution really quickly,” in part because the frozen category is “pretty stale” and because “every kid loves a chicken nugget, but every parent is suspicious about what goes into a chicken nugget – with a lot of good reason,” she said.
With Hip Chick Farms’ poultry products, busy families have an easy solution without compromising on value and quality, she added.
To that end, the company will invest the funds in building out its staff and supply chain to meet market demand and building brand awareness so that consumers know about the widely available products, Palandech said.
In terms of staff, she explained, the company recently added a supply chain director “who is incredibly important for us … because as most people know there is a limited amount of organic anything in this world. So, ensuring our supply chain can meet our demand is incredibly important,” she said, adding the director comes from Annie’s and is well qualified to “shepherd us into the next cycle of growth.”
The company also hired a marketing associate who previously interned for the company, and plans to add an administrative person and knowledgeable sales expert.
For marketing, the company will focus on earned media, search engine optimization, digital advertising, trade promotions and in-store demonstrations and fine-tuning its messaging around being a chef-owned company that creates delicious “beautiful” recipes that are frozen for freshness and convenience, she said.
Overcoming adversity
The success of landing $2 million from Advantage Capital Partners and the high-profile $500,000 investment from Texas Investors Club is all the sweeter for Palandech and Johnson knowing that they overcame overwhelmingly negative odds to secure equity funding as a woman-owned, and more specifically lesbian-owned business.
“In the world of fundraising, in particular equity fundraising for a for-profit company, the odds are very much against women generally, and if you drill down to the LGBTQ community, the odds of securing funds is incredibly slim,” said Palandech.
Palandech is not exaggerating. A recent study from StartOut, a national non-profit that supports, educates and connects LGBT entrepreneurs, found 70% of LBT women who found companies raise less than $750,000 in funds compared to 47% of male GBT founders who raise more than $2 million.
Faced with such discouraging statistics, 37% of LBGT entrepreneurs funded or seeking funding are not “out” to investors, with 12% saying they do not divulge the information because they think it will hurt their chances of securing funds, according to the study. About half said they kept the secret because it was not relevant to the business arrangement.
But for Hip Chick Farms, a company based on increasing transparency into how their products are made and what they contain, hiding the founders’ marriage was not an option.
“It is very unusual for companies like ours to receive the kind of funding that we have gotten, but for us it has been a significant part of our story around transparency of who we are as a family business,” said Palandech.
Plus, she added, the duo did not want to hide who they are because they also want to be “a point of hope to other folks out there who are struggling,” under similar circumstances.
Focus on the business
While Palandech and Johnson did not hide their family life, it also wasn’t a main selling feature or why they secured the Advantage Capital Partners funding.
“We have never led with ‘we are lesbians, give us money.’ We led with, here is this amazing product that people love that we have created and here is why it is going to be successful, here is the success we have had so far and here is where we think we can take it. That is what we always led with,” Palandech said.
She also underscored the importance of finding investors who understood herself and Johnson as people and their beliefs “in family and humane animal welfare and organics,” because ultimately investors supply more than money – they also offer strategic guidance and therefore need to be aligned in the company’s vision, mission, ethical values and approach to achieving business goals.
That can be a tall, difficult-to-fill order, but Palandech stressed “if it doesn’t feel right, don’t take the money, don’t do it,” because “they are going to be with you for the rest of the life of the business.”
That said, Palandech advises other entrepreneurs seeking investors not to shirk from a deal for fear of conflict around the board table – “disagreement is a very valuable thing for people to bring to the table. I don’t think you have to be in agreement all the time … because having investors who are strategically aligned and offer more than money is incredibly valuable.”