Matthew Kershaw and Erin Dunham will open the doors of a tacos-and-tequila restaurant, The Mule, in Hamilton, Ont. Since they burst on to the restaurant scene, the pair have launched four eateries in quick succession. This time, though, they found a way to raise the necessary cash without living in their parents’ basements, running up their credit cards, or signing over their first-born child to a lender.

The fundraising method they chose actually drove traffic to their four other restaurants — Rapscallion, Two Black Sheep and Black Sheep Snack Bar, all in Hamilton, and The Alex in Burlington — and created the kind of buzz you can’t pay for about their new restaurant.

Last fall, Kershaw and Dunham launched a campaign on Indiegogo that raised $104,000. Indiegogo took a share of about five per cent. And Kershaw and Dunham allocated some cash (Kershaw is reluctant to say how much) to hire a marketing company that could generate some publicity for the venture, as well as for a launch party.

It was well worth the effort, Kershaw said. The pair surpassed their funding goal and ended up getting plenty of media coverage. “We really got the word out there,” he said. “The campaign started off with a big bang and then, the money just kept coming in.”

The duo got lots of attention from the media in the form of invitations for interviews in print, and on radio and television. “We noticed a huge spike in activity at all our restaurants,” Kershaw said. “Our restaurant traffic, across the board, has moved up dramatically. I think it really caught the imagination of the city. People thought it was funny — everyone loves the idea of giving the big middle finger to the bank.”

“We’ve seen a big increase in restaurants getting started through Indiegogo campaigns,” Slava Rubin, CEO of the crowdfunding platform said.

The benefit of launching a restaurant or business through crowdfunding, he said, “is that you not only raise funds but also connect directly with customers.” You can “test the market for your idea and establish ways to stay in touch with your supporters after the campaign ends,” he said, reminding them when the restaurant opens, sending notice of specials and generally keeping them in the loop.

To have a successful campaign, Indiegogo says, you must be passionate about your project and willing to let that shine through in your online video. “People don’t invest in products, they invest in people,” a company spokesman said.

It helps if people know a bit about who you are before you launch your campaign, said restaurateur Dave Mottershall, who recently used Kickstarter to raise $40,000 to open a restaurant called Loka in Toronto. Mottershall co-owned award-winning Prince Edward Island restaurant Terre Rouge and had a significant presence on Facebook, Twitter and Instagram, logging 31,000 followers for his locally sourced, nose-to-tail recipes under the moniker Chef Rouge.

“Even though I hadn’t lived in Ontario for 15 years, people knew who I was through my Internet presence,” he said. Mottershall set a goal of $25,000 to launch his intimate 25- to 30-seat restaurant, with a stretch goal of $40,000. He easily achieved the stretch goal and is now in the process of looking for a location.

He figures he would have had zero chance of receiving funding if he’d gone to a bank. “I don’t have a real job in their eyes,” he said, “at least not the type that’s giving me a steady paycheque every week. I knew that the banks wouldn’t be able to help us out.”

To get his first restaurant off the ground, Kershaw lived at home into his 30s. “I’ve never been a fan of banks,” he said. “I don’t think they care if I live or die. I think their goal would be that no human beings work there, so if I can avoid them, I will.” As for taking money from investors, he admitted, the prospect scares him. “Erin (Dunham) and I like to have control,” he said. “We know what we’re doing and we’re good at it.

Both restaurateurs offered a variety of incentives for people to invest in their restaurants. Mottershall’s offerings ranged from a recipe e-book ($10), to an invitation for two to opening night with a five-course tasting menu ($100). You could even have one of the restaurant’s bathrooms named after you ($500).

Kershaw and Dunham offered gift certificates that matched donations dollar for dollar, as well as perks such as a roasted pig’s head and a case of beer delivered to your door ($500) and a roast suckling pig, plus the chance to have your name up on the wall of the restaurant forever ($1,000).

For Hamilton’s growing population of foodies, their’s was a win-win proposition — get a coupon for restaurants they’d go to anyway and help establish another great eatery in town. “We were not looking for a hand-out,” Kershaw said. “We obviously already have three successful places — it’s not like we deserve free money. Basically, we were asking for an advance.”

Kershaw admitted, he and Dunham were in uncharted territory. “No one we knew had ever done this before,” he said. “And we had over $100,000 in gift certificates out there.” He worried a bit that all of the coupons would come in at once, pushing down sales. But it didn’t happen that way. “Over 50 per cent have not been redeemed yet and I’m sure, just like gift certificates in the real world, some of them will never come back,” he said.

Posted
AuthorLorenzo Somma
CategoriesCrowdfunding