If you have a vegan business, you have found your tribe

Hello and welcome to episode fifty-four of The Vegan Business Tribe Podcast with myself David Pannell, co-founder of Vegan Business Tribe.  And if you have a vegan business, or are thinking of starting one, then Vegan Business Tribe is here to support and inspire you not just to build a vegan business, but to build a SUCCESSFUL vegan business.

 

And as always at the start of the podcast I like to do two things: first, give a shout out to our Vegan Busines Tribe members – we really do have the most amazing members and if you’re looking for a supportive group of ethical vegan business people who all want to support you because you are on the same mission as they are then you really don’t need to look any further.  We couldn’t do what we do without the support of our hundreds of members, you are what makes Vegan Business Tribe what it is and are mine and Lisa’s reason for getting up early every morning. And second, at the start of the podcast I also like to give the website a shameless plug!  Hey, at least I’m upfront and transparent about it!  But if you’re just listening to this podcast every week and lurking there in the background without getting involved then I’m now talking directly to you – because you are really missing out on 90% of everything that we do at Vegan Business Tribe.  We are the friendliest most welcoming bunch of businesses you could ever imagine, and if you come and engage with us Lisa and I can then link you up with other vegan businesses and professionals;  we can give you the benefit of mine and Lisa’s experience in the vegan marketplace and also, just really get excited for you!  And it doesn’t matter what stage your business is at: maybe you’ve been going for years and you think you could give the benefit of YOUR experience back to others with a vegan business who are a few years behind you – we often do masterclasses and masterminds with members who have a specific skill that might be useful for our tribe.  Or maybe you just have an idea for a vegan business or want to veganise your current business and want to get some feedback.  I tell you, you will be far more successful if you surround yourself with people on the same mission as you are – and everyone who signs up as a member to Vegan Business Tribe gets a half-hour with Lisa and I on Zoom so that we can find out more and see how we can help.  Because, we WANT you to succeed.  We don’t see why WE should be the ones with a label.  Why should we have to point out that our ‘vegan’ businesses don’t cause suffering or hurt animals?  It should be the businesses that DO that have to come with a warning. And the only way we’ll get to that point is if we make vegan businesses the new normal.  We want to help YOU knock an animal-based product off the shelf.  We want to help YOU support other businesses that have that same vegan mission.  And we want to help you do it in a financially sustainable way.  I start each podcast episode by saying that we’re not just here to help you build a VEGAN business, if we’re being honest anyone can just have a vegan business.  We’re here to help you build a SUCCESSFUL vegan business that is going to actually have an impact on the world and let you align how you make a living with your ethics.

 

So if you believe in that mission too, if you want to be part of Vegan Business Tribe and everything we stand for, then head over to veganbusinesstribe.com and click on the big join button on the homepage and hopefully, instead of just listening and lurking every week, we’ll get to actually have a chat about you and your business.

 

OK, so this week’s topic actually ties in with what we’ve just been talking about, because a big part of actually having a successful vegan business is: MONEY!  Now, I don’t fully understand why, but many vegan businesses – and just vegans in general – don’t seem to like making money!  It’s a topic we tend to avoid.  We think it’s unethical, especially if we’re making money from other vegans.  We don’t like selling, we don’t like asking for money.  And if this sounds like you then I’ve got some bad news for you: if you want to have a successful vegan business, then that means you have to take money out of someone else’s bank account, and put it into your own.  Even if you are a charity or a not-for-profit.  Even if you are selling to businesses and not the general public.  Yes, your ethics is important.  Yes, your mission is crucial.  But like it or not, money will always be one of the most important things in business.  And if you don’t agree with me, then just trying running your business without it for a couple of months and see what happens.  Like it or not, in the system we currently live in, money is the oxygen of business.  And for most businesses, that money comes from one of three places.  Ideally, it will come from your customers.  You are providing such a good service or products that people will pay you for it – and again that goes for charities too but instead of customers we use other euphemisms like supporters or doners. Many companies never need to take outside investment to grow, they simply use the money they generate from their sales and re-invest it back into the business.

 

The second place that money comes from, if all your costs aren’t covered by your customers yet, is usually the business owners.  Or rather, you.  And I’ve done this, I’ve self-funded new businesses, I’ve used savings, or relative’s savings, or income from a day-job to get a business off the ground.  In fact it’s how we first launched Vegan Business Tribe.  We took the money that Lisa and I were earning from doing consulting work with highstreet brands and food manufacturers wanting to get into the vegan marketplace, and we put that money back into building Vegan Business Tribe.  Lisa calls it our ‘Robin Hood exercise’, taking money from the non-vegan companies and using it to support the grass-roots vegan business movement – and it feels good!  Or it may be that you go out and get a bank loan against a property you own, or max out a few credit cards to get your business off the ground and I know lots of businesses that have done this scrappy, boot-strapping business growth and let me tell you, when your own money is on the line, especially the house that you and your family are living in (and I’ve been there!) then that really focusses your mind.

 

But the third place that many companies plan to get money from is investors.  Now, we see a lot of this in the vegan business scene.  Someone comes up with a great idea for a new vegan product and the first step of their plan is to go find an investor who is just waiting to throw money at them to make it a reality.  Now, investors ARE interested, massively, in vegan and plant-based right now.  I was at Plant Based World Europe last month and there was a lot of money in the room and a lot of people looking to find the next big thing.  However, only a tiny fraction, and I’m talking single-figure percentages, of vegan businesses will ever attract an investor.  And hardly ANY will find an investor for the start-up phase of their business.  This is because investors are canny people.  They usually have a lot of experience of business themselves and know that lots of ideas never get off the ground, even if they are well funded. A lack of money is rarely the main reason a business fails, remembering that hundreds of thousands of businesses every year find success through bootstrapping, hustling and the hard work of their founders.  Most investors I know are incredibly reserved with their money (it’s why they now find they have so much of it!) and the very last thing they are going to do is give THEIR money for YOU to try out an unproven idea.  Just because you think that something should exist in the world doesn’t mean that someone else will give you money to try and make it happen. And having this dose of reality right at the start will actually save you a lot of time later on, because while you were spending all that time trying to find someone to invest in your company or idea before you got started, you could have been instead spending that time proving the idea and working out if people other than yourself would be willing to pay money for it.  Because most investors are not gamblers.  If they were, they would take their money down to the casino instead.

 

A big rule of business is that you should only ever put money into something that you have already proved works so that you can scale it up to make it work bigger and better.  So investors are looking for companies where the founders have already done this and proven the concept first – where the company has already figured out what works and is already generating sales and building a customer base.  Because at this point, they know that an injection of money will let the company scale-up this initial success so that it can do it bigger and better to make even more money in return.  If you go to an investor just with a ‘great idea that will make loads of money’ and hope that they will give you some cash to have fun trying to see if you’re right, then don’t be disappointed when none of them answer your emails. 

 

There are only two cases when an investor might get involved before you’ve proven the concept yourself.  The first is if you find someone with more money than sense, and I hate to use that phrase because it’s really unkind, but I have seen people give money to someone setting up a business in a sector they nothing about, just because they think that they will get a load of money back because it’s a growth sector.  I was around during the .com bubble of the 90s and early two-thousands.  I saw investors giving obscene amounts of money to university graduates with an idea to be the next Friends Reunited or Alta Vista, only to find that money gone within six months and being left with a useless website that had no revenue streams in place.  And if you’ve never heard of Freinds Reunited or Alta Vista then that just goes to prove what happened to both those then huge early web companies.  And there is some of that going on in the vegan sector right now.  People see the money that has been made from investing in Beyond Meat or Oatly, and think that if they give 10 grand to someone who has developed a vegan seitan recipe and it will make them into a millionaire.  But trust me, that kind of thing will only lead to disappointment on both sides and it may even leave you unwilling to try again.  Most businesses get it wrong to some degree when they first start out, because that’s part of having and building a business.  Everything before you actually get your first customers is simply a guess of what you think might work.  But if you start out wrong with a big bag of someone elses’ money, all that often means is you get it ‘wrong-er’ even bigger.  I sat down with a Vegan Business Tribe member recently who was initially looking for funding to start their business, didn’t find it so started anyway but then completely rebranded and pivoted about six months in.  And I asked if she had got money at the start would it have made a difference, and she said no – because all she would have done is spent that money on all the wrong things before she’d properly worked the business proposition out.  She’s have spent thousands on a website instead of learning to build one herself – and it would have been a complete waste of that money.

 

The second case where you might get someone to invest in your business and give you money before you have proven an idea is if you are an exceptional person with a solid record of building successful businesses in the past.  If you can show someone that you have built a string of successful businesses in the past, and this next business is going to take everything you have learned from that to create something even bigger and better, then people might be interested in what you are planning.  You’d have to prove that the next thing you are doing builds on the success of the previous businesses you built in some way (it would have to be in a similar sector or be based on the same base understanding) but some investors will back a person more than an idea. Imagine if Mark Zuckerberg left Facebook to set up the next big thing to connect people online, do you think he’d have any problem raising the money to do it from people who wanted in right at the start?

 

This is called seed funding, when you get backing to set up a business before you’ve even got a single customer.  But for most of us, it’s going to be down to us to prove a concept and get a business up and running first before then looking for investment to help us to scale up something that is already working.  If you’re selling a product, an investor will want to see that product already in a range of shops with a growing awareness of it amongst the public.  If you have a service business the investor will want to see a strong ongoing revenue from clients you have already won.  It’s a hard bubble for me to burst, especially as we have a lot of people contacting us at Vegan Business Tribe saying they have a great idea for a vegan product and they need help finding an investor for it.  But the kindest thing I can say is that NO-ONE is going to give you money to just try out an idea.  People who have already made money that they are now looking to invest have the privilege of being able to avoid all that early hard work of getting a business off the ground and proving that it will work.  They’ll leave that bit to other people and want to get involved once you’ve already done that.  Most want their investment to take a business that has already been proven to the next level which will hopefully be the safest bet to them earning that money back several times over.

 

So if you’re at the point where you’ve got a business that IS working, if you can prove with real-world sales figures that the customers, the market and the demand are all there, and you can show there’s an even bigger slice of the pie if only you could scale-up what you are doing, then this is usually what they call series A funding.  This is what a company looks to raise after they have proven a viable business model.  It’s when you can prove a company has more potential but that potential is being held-back by lack of funding.  And for larger businesses, series A raises can be up to several million with a number of investors and funds coming together to invest in a business.  You might not be looking to raise a few million, but when you get to this point that you have proven an idea and you need more money to make it work even bigger and better, what is an investor actually looking for in a business?

 

Well, the first thing to say is that any investor will be looking for a large slice of that pie for themselves. And you will have seen on TV programmes like Dragon’s Den or Shark Tank that business owners come on asking for hundreds of thousand in return for a minuscule percentage ownership of the business.  And you will see that the Dragons or the Sharks usually laugh that offer aside and come back saying they want 30 or even 50 percent of the business in return.  Most angel investors, so individuals putting money into a business, will be expecting at least 10-20% ownership of your business in return.  A lot of the time it will depend on how much money they are investing versus how much the business is currently worth because, in essence, they are buying part of the business with their investment.  In the first company I owned that took on an investor, he wanted 25% of the business so that he had the same control of the company as the other three current shareholders, and it was worth it.  A combination of the money he put into the business along with his experience at the monthly board meetings enabled us to really scale up our operation.  Because more often that not, with an investor you are not just getting a sum of money, you are getting accountability.  That person is not just hiding their money under the mattress, they are putting it to work.  And they will expect to see monthly, perhaps even weekly or daily reports on sales, conversions and staff productivity.  They will be wanting to see their investment making a return and won’t be afraid to start pushing for changes in the business if it’s just not happening.  Running a business yourself versus running a business with investors is a very different experience – and can be either a good or bad impact on your company which is why you need to spend time getting to know the investor and their motivations to make sure it’s a good match and their expectations meet yours.  An investor will want to know what you’re going to do with the money they put into the business and will that money solve one of the restrictions that is preventing you from growing?  And more importantly, they will want to know when they can expect to start making a return on that money!  They will want you to be really clear on this early-on.  It doesn’t mean that if the plan changes later that they will try to pull their money and crash your company, a good investor knows how business goes, but they will want to know you have a clear, sound financial and growth plan in place and be able to see how they fit into that – not that you’ll just be making it up as you go along and hoping with a bit of funding you might make some money back.

 

Now – fully going into detail of what an investor will expect to see in your financial planning is a whole other podcast, in fact it’s probably a series of podcasts and very technical in-depth articles with a few accountants involved for good measure, so I’m not going to go into it here!  But you need to know, have confidence in and be able to prove your figures and your stats when you speak with potential investors. It’s the number one indicator many look for when first speaking with a business owner: how much of a handle has this person got on what the financial reality of their business is and how much confidence do I have in their ability to deliver their plan.

 

Because investors are not just looking at the figures.  Yes, it’s a huge part, maybe even the biggest part, but a plan on paper or memorised numbers are worth nothing.  I have been told over and again that the thing a lot of investors bring into their decision-making process is their judgement of the people who are involved.  Does this person have a record of making money?  Do I trust this person’s vision and enthusiasm for the business?  Do I see a culture here amongst the people involved that will be conducive to business growth? What skills do these people have, and what gaps are there – and are they smart enough to have already identified those gaps and are working to fill them?  I best heard it once described by an investor as looking at ‘who’s on the bus’: it’s important to make sure that the right people are on the bus first, especially those that are in the key seats, before they figure out where that bus is going to go.

 

So, if you’ve got a strong grasp of your figures, you know you’ve got the skills and the ‘right people on the bus’ and you’ve already done the work to prove the concept and get the business off the ground yourself and you know there’s an even bigger market you could go for, then you’re in quite a strong place to make a case for someone investing in your business.  But this is where a lot of people fall down because they don’t know HOW to get that information in front of an investor.  Investors get so many people coming to them with a business opportunity.  They get cornered at conferences, ambushed in elevators and receive a constant stream of LinkedIn requests, meaning that they actually spend a lot of time trying to avoid people with business ideas just so they can get on with their lives!  So you need to be able to put all your information and evidence together in a single document, usually called a pitch deck, that an investor can read through in just a couple of minutes to decide if they think there’s an opportunity for them or not.  Again, I could do a whole series on pitch decks, and I might do because we’ve had a few members sharing their pitch decks for feedback in our community hub and we’ve had some really good conversations about them.  But as a very quick guide (that I might expand on later) this is, in the main, what an investor is looking for in your pitch deck document.

 

First, they want a document they can get through quickly and that answers the majority of their questions. This usually means no more than 10 slides or pages, it means one or two sentences per page that actually make sense because they want to be able to read through this document themselves without needing you there to explain what each graph or bullet point means.  It might be a PowerPoint, it might be a PDF but it should look professional and exciting.

 

At the start of the deck, they want to see you very clearly outline the problem that your business is there to fix and how you are going to do it, again in a couple of sentences, not your life story.  They want to see the external data that identifies the size of the market and how big the opportunity is here.  They don’t want just you saying you reckon that there WILL be a market, they want industry research and evidence – remember they want you to have already done the hard work proving it.  Then they will want to know what’s going to make YOU succeed in delivering the solution?  What advantage do you have in this marketplace compared to potential competitors?  Do you have some unique knowledge and experience, do you have some unique systems or intellectual property that no-one else has? Have you already got traction in this market, have you already got a brand that people know and recognise or a huge reach on social media that you can leverage?

 

Right, so I’m aware some people will be making notes here so let me just quickly recap on those because these first things should make up about a third of your pitch deck:  So slide 1. What problem you have identified in the world and how your business going to fix it.  Slide 2. How big is the opportunity, what’s the size of the available market or customer base?  Slide 3. What’s unique about you and your company that means you’ll have an advantage over everyone else, including what success do you already have?

 

OK, so once you’ve got that outline of what the marketplace is and why you believe you’re going to take it by storm, next you need to show an investor HOW you are going to do it and that should make the next three slides.  So what’s the plan?  How are you going to find customers and how can you prove you understand them?  What’s your marketing plan going to be to get in front of these people and how much is that marketing going to cost? How much is it going to cost to get each new customer (called cost of acquisition) and of course, if you’ve already got a business up and running then you already have real-world company figures to back it up.  Next, how will this investment of money free your company up for growth, how are you going to scale up the business, what’s the business model for growth?  What’s your sales figures and turnover now and where are you aiming to get it to?  How many customers do you need and how long is it going to take you to get there?

 

So all that will make up the next third of your pitch, so just to recap if you’re making notes then slides 4, 5, and 6 were: 4. What’s your route to market and how well do you understand your customers?  5. What’s your marketing plan for getting in front of these customers and how much is each new customer going to cost to acquire? And 6. What’s the business model? How are you going to scale up and become profitable?

 

And that leads us to the last third of the pitch deck, which is more about the team and what’s going to happen next. So who’s on the bus?  What skills do you all have and where does your passion come from as the person leading the business?  Where are the gaps and is that part of the plan to fill those gaps, is that why you need investment?  Next, the investor needs to know about what YOUR plan for the future is.  Have you got an exit strategy in mind?  Are you building a company to sell and if so what’s the timescale?  Are there other investors already involved and other people with a vested interest? And then finally, and perhaps so obviously that some people forget to address it at all, how much money do you actually want?! 

 

Now, everything in the pitch up to now should have been laying the ground for this. You should already have an idea from going through how much your marketing is going to cost and what plans you have next for the business about how much it’s all going to cost.  But not just how much, also when do you need that money?  Is it one lump sum you need or funding over a period of time?  Is this money to build your company to a certain point where you will then need to go out and find MORE money to grow again?  Is this just going to be the first funding you will need and you’ve got plans to raise more in the future?  And be very open, honest and transparent with any investor about your plans for the future.  They are probably business people themselves, they will get it.  They will understand if you need investment to get you to one place, and will then need more to get you to the next.  In fact they will probably spot that from your figures before you do.

 

So, to finish that round-up off for your notes: Slide 7 should be about you and the team; 8. What is the plan for the future, when’s the investor going to get their money back and when are you looking to exit (if you are)?  And 9. How much are you actually asking for.  And that should give you about a 10 page concise document that will give an investor all the information they need to decide if you’re a good fit for them.  But one thing I haven’t mentioned that an investor is ALSO looking for is excitement!  You want to get people excited about your business and the opportunity to be invovled, you also want to convey how much enthusiasm and excitement you are bringing to the table too – because too many people forget that you can and should have fun in business, it should be a positive soul-lifting experience for all involved when you have your own company, so make sure you’re getting that across too!

 

And once you have this really concise document then you can share it with anyone and everyone who you think might be interested in investing.  Remember that people who publically advertise themselves as investors, or investment companies, get a huge amount of pitches sent to them. And there are wholly vegan investment companies such as VegCapital which have backed vegan brands such as One Planet Pizza and This!  But there are also a lot of below-the-radar potential investors out there also.  Beyond Animal has a platform for bringing together vegan companies with ethical vegan investors which I’d recommend you go sign up for, and I’ve had a number of messages from people who are in banking and finance and are interested in investing in a vegan business to help them grow.  Because yes an investor is looking to make money on their investment, but many also want to invest to support a mission as well and the more people you get your mission in front of, the more chance you have of attracting these people to you.  Innocent Drinks which had a valuation of over 500 million when it sold, started out by sending an email to all their friends and family asking if anyone knew anyone who was rich who might be interested in backing their fledgling fruit-drinks business. 

 

And to finish off I’ll make the final point that just like winning a customer, sometimes winning an investor is a journey and takes time and relationship building too.  Most investors will get to know a company over a number of months or even years before they invest.  They will be watching, learning, getting familiar with your brand and the work you do.  Perhaps they will first see you at a trade show but not actually engage with you. Perhaps they will read about a campaign your company has done and that gets you on their radar.  Perhaps they will even have an initial conversation with you, decide the opportunity isn’t for them but keep watching to see what happens next. I remember our first investor in my previous business was a customer first for over a year and we had no idea was thinking about getting more involved. Getting an investor isn’t like getting a bank loan, you don’t just apply and then a computer decides if you qualify or not.  It’s a very human decision that isn’t just based on the figures you put in front of someone.  Getting an investor is getting someone to believe in your mission and join you on it.  Which is why as a vegan business talking to an investor who is also vegan, you have much more of a chance to prove that together you will be able to move us all that one step closer to a vegan world.  Use that.  Use that vegan angle, or if the investor isn’t vegan themselves use the ethical angle of veganism to tie in with their wish to make not just money, but a fairer more ethical world.

 

OK, so if you have been listening to this thinking that you do need to go back and listen again to take notes, then don’t worry – let’s do a full round-up of what investors are actually looking for:

 

 

And that’s pretty much it!  Often I record this podcast on a topic because it’s a question we get asked a lot and I like to be able to send someone to an episode to give them more information, and we get a lot of new members especially asking us about finding an investor so hopefully this has helped give you a better idea of if you’re in a position to engage with potential investors at the moment.

 

And like I said, I think we’re probably going to be adding more around this in the members’ area of the website in the new year, although we do have quite a few members who have got experience of things like creating pitch decks and getting investment – and everyone in the vegan sector is always happy to share and help others who also have a vegan business, which makes this whole industry so amazing.

 

Right, I’ll let you go now but just before I do could I ask you for two quick favours. First, if you found this episode useful – and I know you did because you’re still listening – then I would love if you could leave the podcast a review on iTunes, or give us a 5-star rating or a thumbs-up or whatever your platform lets you do.  At the very least can I ask you to subscribe to the podcast, because that then lets the platform know that this podcast is worth listening to so it suggests it to more people.  just doing this is actually a really big way you can support us without spending any money to do so.  Second, speaking of money, we are wholly supported by our members over on the Vegan Business Tribe website so if you love what we do and want to support us, or if you are looking for help and advice with your own vegan business, then come and join us.  It’s only £12.99 a month as a full member which is the equivalent of buying a cup of coffee a week from your local coffee shop – but it means you get access to everything we do: our full community where you can link up with other vegan business owners but also get access to Lisa and myself on our live Zoom workshops and events.  Go take a look at the website to see everything you get as a member, and we dearly love talking to people about their vegan businesses and seeing how we can help – so get yourself signed up if you’re not already a member and then let’s have a chat about yours.

 

So, thank you so much for listening, we always appreciate you giving up your time to join us on the podcast and it’s heartening seeing our listener stats growing each week and how many people are interested in vegan business, and I will see you on the next one.