On Friday we got a call from the State confirming that our incorporation is finalized and we are officially in business. As a cooperative, our community of member/owners will serve as the foundation for our capital campaign, and the key factor in taking us from a highly researched and developed idea to a brick and mortar store open for business.
Our Board has developed a start-up budget that calls for us to raise $1.5 million in capital to open the Richmond Food Cooperative. The capital plan depends on “member equity” (at $125 equity + $25 joining fee each) from 800 member/owners, to raise a total of $120,000. How soon we open the Co-op depends on how quickly we can sign up these 800 member/owners.
Our hoped-for recruitment schedule is to sign up 100 member/owners per month, starting this month. This would allow us to open in September (a 9-month timeline). In order to be realistic, we have also developed back-up timelines: 12 months (opening in December, 2013) and 18 months (opening in June, 2014).
A second step in financing the Co-op is to set up a member loan campaign. Once we have reached our halfway point of 400 member/owners, we will invite members to further support start up costs by lending money to the Co-op. These loans would be money that the Co-op pays back, with interest, over a set schedule. Our budget calls for us to raise $600,000 in this way. While not provided by all members, member loans represent commitment and engagement in the co-op on behalf of its members, and will serve as a local investing opportunity to make this a truly Richmond-based venture.
We also expect to raise capital from the proceeds from fundraising events, government economic development funds, crowd sourcing, landlord improvements, contributed product, vendor credit, etc.
The most vital source of capital is a commercial loan. In our budget, we are planning for about 35% of our total capital to come from a bank loan. We must, however, have secured the member equity and member loans before we can seek a bank loan.
So, what we are doing right now – recruiting Co-op member/owners – is perhaps the most crucial part of our capital plan, and our timeline for opening the doors of the Richmond Food Cooperative depends on it! It starts with you!
-David King, Board Treasurer