During yesterday’s webcast, Fire Department Coffee CEO, Luke Schneider, discussed how he raised $1.8M for his business through crowdfunding with the help of StartEngine. The webcast also included Harrison Bert, Director of Sales for StartEngine and was moderated by Wayne Bennett, SVP of Retail for ECRM and RangeMe.

For those of you not familiar with it, equity crowdfunding allows startups to raise capital by selling shares of their company to a large number of investors, typically through an online platform. It’s rapidly becoming a vehicle of choice for emerging brands looking to raise capital quickly while maintaining control of their company, and enables everyday people to get in on the game with minimal investment. 

Why FDC chose equity crowdfunding

FDC’s Schneider

Fire Department Coffee Is one such brand. Based in Rockford, Ill. FDC is a veteran-owned business certified by the National Veteran-Owned Business Association and National Veteran Business Development Council, that was created and run by active and retired firefighters. Each batch of its coffee is freshly roasted in the U.S.A. Schneider and his team are committed to giving back via the Fire Department Coffee Charitable Foundation, which is dedicated to supporting first responders facing physical, mental, or other challenges. 

Originally a direct-to-consumer brand, FDC made its first venture into brick-and-mortar retail when it landed on the shelves of Meijer from a buyer meeting at an ECRM Session. It started on the shelves of 10 stores and, based on its sales, expanded chain wide. They’ve since landed several other retailers, including Walmart, via its Open Call application submitted via RangeMe.

But brick and mortar is a different game than DTC, and requires more upfront capital to support. “With DTC, you get paid right away,” says Schneider. “With the expansion into retail, we needed a lot more cash to fund it. The challenge is, when you need cash, that’s the worst time to raise it, as when sharks smell blood they will attack, and you will get less favorable terms.”

FDC and StartEngine

Schneider already knew about StartEngine from another brand that has used its platform to raise capital, and liked the fact that he wouldn’t have to give up control of his company. “Without StartEngine we would have taken a real beating in the raise,” says Schneider. “I could have even lost majority control and also our veteran certification, and it would have changed our outlook on the future.”

With equity crowdfunding, investors get non-voting shares of the company, which could increase in value in the event of an exit like an acquisition or IPO. As with any investment, however, there is always a risk, and equity crowdfunding investors must be aware of this.

Once FDC’s application was accepted, the StartEngine team worked with them to tap into the three investor communities involved in its fundraising. First, there are the members of the StartEngine community, who are always looking for great opportunities, many in the CPG space. Then there are new investors from outside the platform. Finally, there is the FDC community.

Leveraging the FDC community

And the FDC community is HUGE. A master of social media engagement, the brand has more than 10 million followers across various platforms who love its hilarious videos depicting life in a firehouse. FDC engaged its followers around the raise via social media posts, email campaigns and a banner at the top of its website, inviting its customers to participate in the raise. 

FDC even offered incentives based on the level of investment, such as discount codes for its coffee and merchandise, a tour of its facility, and even tickets to NASCAR races in which an FDC-sponsored car competes. 

As a result, FDC drew investments from 1,400 individuals, many whom Schneider knows personally as big supporters of his brand, and with $1.8 million in its coffers, the company is ready to boost its growth at retail. “The future is bright,” he says. “We are profitable, and we even made some new friends in the process.”

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