Deals

CircleUp serves small food producers healthy portions of investment

I am a total health-food nerd. I love comparing notes about vegetable-based snacks, and granola sends me into spasms of excitement.

The health-food, slow-food, boutique/artisanal/local-food movement is taking off. More and more people nationwide are swapping potato chips for kale chips and awareness about healthy eating practices is not only spreading but also trendy.

Today, crowdfunding startup CircleUp announced that it has helped five food-related businesses raise over $5 million.

CircleUp combines the popularity surrounding small-production, high-quality products with the momentum of crowdfunding. It is an equity-based platform that enables accredited investors to make direct investments in up-and-coming consumer products businesses.

The venture capital community is traditionally hesitant to put money into early consumer products companies, although these types of small businesses make up a significant portion of the economy. CircleUp features companies that are already producing and distributing their wares but are looking to scale their business and reach a larger market. It puts them in touch with interested investors who may be looking to diversify their portfolio or simply want to have a stake in something tasty.

“We love that investors are able to see, touch, taste, and experience the company’s products first hand,” said CEO Ryan Caldbeck. “An investor on our site can go to their local Whole Foods or Starbucks to see and test the products, which we believe helps the investor feel more connected to the investment that they are making. We also believe the lack of traditional funding for early stage consumer/retail products creates an opportunity unlike investments in other industries, where the risk of adverse selection for crowd funding platforms is greater.”

CircleUp shared four of the five startups that successfully raised money on its platform: Little Ducks is a Brooklyn-based company that makes no-sugar-added fruit snacks for kids; granola producer 18 Rabbits; Melt, which creates all-natural butter alternative spreads; and kale chip manufacturer Rhythm Superfoods.

Caldbeck founded CircleUp after working as a director at a private equity firm. He saw a gap in the market for this type of funding and left his job to enter the world of entrepreneurship. Since launching in 2012, CircleUp has closed 8 deals and collectively raised over $7.5 million. Read a full profile of Caldbeck on the New York Times.

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