Texas-style BBQ joint DCity Smokehouse has a new location, and they’re using crowdfunding to make it happen.
Through D.C.-based company EquityEats, DCity Smokehouse is seeking backers to invest between $250 and $1,000 in the restaurant’s forthcoming 203 Florida Ave. NW location. The perks? VIP treatment with exclusive event invites and credit for anything on the menu based on the amount invested.
It’s not clear how much the restaurant is looking to raise or how much it’s raised so far.
It’s just one of the local restaurants that have used EquityEats as a fundraising platform.
Despite the way the name sounds, EquityEats is not a traditional equity crowdfunding platform, where backers invest in exchange for equity. The platform does offer that option for bigger investments (in the hundreds of thousands), said a company spokesperson, but generally, backers are investing in exchange for credit at the restaurant. This is a change from EquityEats’ original model. (With DCity Smokehouse, you get a slight “return on investment,” if you will, getting, for example, a $300 credit for a $250 investment.)
Still, the philosophy is the same: this kind of crowdfunding, like equity crowdfunding, allows businesses to attract several, smaller investments – instead of a few, large ones from venture capitalists.
For DCity Smokehouse, it looks like it’s only accepting investments in exchange for credit. We reached out to the company to see if it’s also seeking investors for equity.
The pure equity crowdfunding route has been taken by some food companies, like Barrow’s Intense, a Brooklyn distillery that raised more than $100,000 through a platform called Wefunder earlier this fall.
EquityEats was founded by Johann Moonesinghe. Its advocates using the investment process as an opportunity for restaurants to build a community of local, loyal customers.
“The big idea was that if every restaurant opened with local foodies and drink enthusiasts who were invested in the concept’s success, the high failure rate of new restaurants would decrease,” the company explains on its website.
Local restaurants like vegan tea and coffeshop Calabash Tea & Tonic on 7th Street, retro diner bar Fare Well on H Street and Bluebird Bakery have also raised money on EquityEats. Bluebird Bakery raised nearly $100,000 more than the $300,000 it set as a goal, reported the Washington Post in the fall of 2015. The platform currently features restaurants from cities like Seattle and Detroit.
A relatively recent concept, equity crowdfunding was first legalized in 2013 by the USA JOB act.