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Finance

Crowd-funding Platform Connects Entrepreneurs With Consumer-Product Giants

Senior Entrepreneurship Writer at CNBC
Opinions expressed by Entrepreneur contributors are their own.

If you are growing a skin-care business, networking with execs at consumer products giants could open some valuable doors. But how to make those connections? A new partnership between niche crowd-funding platform CircleUp and Procter & Gamble could help entrepreneurs build those links.

The goal of the partnership is to swap expertise. P&G gets insight into consumer and investor behaviors on the innovative edges of the consumer product market. Entrepreneurs raising money on San Francisco-based CircleUp, which targets midlevel food, health-and-wellness and apparel businesses, get access to P&G business experts to learn about topics like building their brand and growing their supply chain. The partnership piggybacks on a similar one CircleUp formed last year with General Mills.

For the corporate giants, CircleUp can provide ear-to-the-train-track market insights, says Andrew Backs, the P&G representative that manages the corporate giant’s relationship with CircleUp.

Related: Have an Idea for the Next Kale Chip? 3 Tips for Success in the Natural and Organic Industry (Infographic)

As part of the partnership P&G business experts will work one on one with CircleUp entrepreneurs on “incubator days." For those promising consumer-products companies that make the cut to raise money on CircleUp, the platform can be an opportunity to raise both money and awareness in a market where ways to get noticed and funded have traditionally been more limited.

Kim Walls, owner of Babytime! by Episencial, is among the business owners planning to attend the P&G incubator days. “Everything is easy when you know how, and we get access to a group of people who know how,” says Walls whose Los Angeles-based company was the first to raise funds on CircleUp. “And they are hard to get to,” she adds, referring to P&G executives. Walls plans on selling her business when it is big enough and so being in front of her potential buyers and hearing what they look for in a company is valuable, she says.

Related: Delay in Crowdfunding Rules Hurts Foreign Entrepreneurs (Opinion)

CircleUp, a nine-person company, is one of an army of new crowd-funding platforms but its niche fills a gap for midlevel entrepreneurs in the consumer-products industry, which does not have the venture capital network that the tech industry has. The site invites consumer-product companies with $1 million or more in annual revenues to apply to its crowd-funding platform.

The crowd-funding platform is choosy about who it accepts for its platform, says Rory Eakin, co-founder and chief operating officer. Since launching in April, CircleUp has received applications from more than 600 companies but accepted only 2 percent of applicants. If accepted, the business’s pitch is put in front of CircleUp’s network of thousands of accredited investors. If fundraising goals are met, a broker-dealer takes a percentage. CircleUp is applying for a broker-dealer license.

Related: 3 Rules for Successful Crowdfunding

Nine companies have successfully raised money on CircleUp, each averaging just shy of $1 million in funding, according to Ekin. For example, kale-chip company Rhythm Superfoods in Austin, Texas, attracted $764,000 in funding, drawing investors from California and Washington State.

If you run a consumer-product business, what has your experience raising money been like? Leave a comment below and let us know.

Corrections & Amplifications: An earlier version of this piece stated that CircleUp took a percentage if a company's fundraising goals were met; it does not. Currently a separate broker-dealer receives a cut. CircleUp is seeking to secure a broker-dealer license.

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