Misha’s is trying to raise $5m in a post seed, pre series round A through the crowdfunding platform Fairmint – an investing platform that takes Fiat currencies and cryptocurrencies – which will let consumers and prospective investors contribute through a Reg D. plan, company Co-founder Aaron Bullock told FoodNavigator-USA.
With a $500 minimum buy-in, anyone can invest in the brand and enter into “an agreement for future equity” of the company, Bullock said.
As of Jan. 26, the company already had $1m of the $5 m bridge fund raised by Slauson & Co, Lifeline Financial, and former NBA player Kevin Johnson – bringing it closer to circumventing more traditional fundraise strategies, such as through venture capitalists.
Trying a different approach to raising capital
Unlike traditional crowdfunding, Bullock explained that Fairmint is not about consumers giving Misha’s “some money” and then receiving “some cheese.” Instead through this crowdfunding plan, these investors will own a piece of equity in the company, and they'll have a direct voice in where the company goes next, he said.
The money raised through this crowdfunding plan will help further develop the business, and as Bullock claimed, the brand has a “ton of growth ahead.” Part of that growth will include a recently signed deal with Walmart that’ll see Misha’s plant-based spreadable cheese products in over 700 stores nationwide by May 2023.
Misha’s closed out 2022 with around $1.5m in revenues, and "with the addition of Walmart, we will probably close up around $10m plus" in 2023, he added.
Will we see a dearth of smaller brands?
The move to use a crowdfunding method to raise capital comes at a time when many food and beverage start-ups are finding it harder to raise capital. Or, as Bullock puts it, "the economy is a little crazy” at the moment.
"LPs are pulling out of funds, or they're just holding their money back. Our sector, however, the dairy-free dairy sector is actually growing ... Capital is where we need help."
Historically, “the food business is a very cash-intensive business,” and many food start-ups turned to venture capitalists to raise money, Bullock said. From what he has seen in the market recently, investments are trending to “larger, more established companies, [and] they're not going to the smaller brands,” he noted. Many start-ups have thus gone out of business "not because they didn't have good products, but because they couldn't get capital," Bullock added.
While this creates challenges for new entries to come into the market, Bullock also explained that without access to capital, many consumers are ultimately going to have fewer options when they look for products in the grocery store. To keep this from happening, he believes that the food industry needs to come up with innovative ways to raise capital, including through crowdfunding.
“If we as a community can't figure out how to build and support brands, collectively in this way ... If we can't figure this out, now, you're [going to] start to see a dearth of these smaller brands on the shelves.”
Can the plant-based cheese category make a comeback?
Not only are economic factors making it difficult for start-ups, but the plant-based cheese category (and the overall plant-based space) has been under the microscope lately.
Per SPINS data from fall 2022, the overall total refrigerated plant-based cheese category was down -2.3% to $218.94m with units down -3.5% from the 52 weeks to Sept. 4, 2022. Additionally, for the blocks, tubs, and wheel category – in which Misha's operates – the sub-segment is down even more, with units being down by -10.3% and dollars being down by -6.1% to $27.43m for the same period.
Despite these market and category challenges, Bullock sees an opportunity to grow Misha’s brand, noting that while consumers are feeling the economic pinch of inflation, they still are trying to maintain a healthy lifestyle. On top of that, many consumers are opting for dairy alternatives for dietary reasons, including lactose intolerance, he added.
"There are things that remain true. One, people need to eat to survive. And two ... the consumer is evolving," Bullock said. To that end, Misha’s hopes to address both of these needs as it looks to grow its brand during a challenging time for the plant-based category and food start-ups in general.