Venture capital has been the center of controversy for years due to the general lack of accessibility. It’s often referred to as a closed group for the rich and wealthy, meaning most founders will never break in.
Fortunately, startup funding is moving in the right direction with alternative funding methods like equity crowdfunding allowing investors to raise from their communities and shows like Shark Tank offering a diverse crowd of founders the chance to raise money and gain publicity for their company.
Startups like Kahawa 1893 and Pureboost have tapped into these methods to help raise from funds without the need for venture capital.
Margaret Nyamumbo is a Kenyan-born entrepreneur and founder of the coffee brand Kahawa 1893. The name Kahawa means coffee in Nyamumbo’s native Swahili, and 1893 denotes the year coffee growing returned to Africa. Nyamumbo’s company is addressing the gap in African coffee production and profits. According to the International Coffee Organization (ICO), women are responsible for 70% of African coffee production, but they receive less compensation and few ownership opportunities compared to men.
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In February, Nyamumbo appeared on the popular “Shark Tank” TV show and received a capital infusion to support her company’s growth. During her pitch, Nyamumbo said the company pulled in $2 million in 2022 and matched $10,000 in tips that went to women coffee producers.
In 2021, the brand became the first Black woman-owned coffee brand available in Trader Joe’s, just one of its milestone moments preceding the “Shark Tank” appearance and investment.
From Kenya To Wall Street
Nyamumbo is a third-generation coffee farmer born in southwestern Kenya. She received her bachelor’s degree at Smith College in Massachusetts after receiving travel expenses through a local fundraising initiative. She obtained an MBA from Harvard Business School and began working in investment banking on Wall Street. During this time she began reviewing the local coffee scene and its economic dynamics. She noted that despite the rise in the price of a cup of coffee, coffee farmers were not receiving much of a windfall.
Women play a significant role in coffee production in Africa but rarely own the land and receive proportional compensation. Nyamumbo’s goal with Kahawa 1893 is to source coffee from women farmers in Rwanda, Congo and Kenya to ensure they receive equitable compensation. The company also offers consumers a portal to send a tip that goes to these farmers, along with a dollar-for-dollar match from Kahawa 1893.
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‘Shark Tank’ Appearance Draws Interest And Investment
During her February appearance on “Shark Tank,” Nyamumbo told her company’s origin story and described the gender inequities in the African coffee industry. As negotiations progressed, several Sharks made offers, with one noting the company’s $7 million valuation seemed high. This prompted Cuban to state the company was “worth more,” which drove the other Sharks to offer a range of offers to Nyamumbo.
Nyamumbo ultimately accepted the offer from guest Shark Emma Grede. They agreed on a $350,000 capital investment in exchange for 8% of the company. Grede is a successful British entrepreneur. She created the denim brand Good American in 2016. She is also a co-founder of SKIMS, a multibillion-dollar shapewear and clothing brand. The other co-founders include Kim Kardashian and Grede’s husband, Jens Grede. She is the first black woman investor in Shark Tank’s history.
Kahawa 1893 offers a range of roasts through its own site and various retailers. Its products include Safari Blend, Serengeti Blend, French Roast and numerous “Shark Tank” bundle packages.
Equity Crowdfunding is a unique method of raising funds that allows anyone to invest in startups. This can be great for brands with decent traction and communities, because they simply leverage that community to turn customers into investors. This means brands have more committed customers and thousands of brand ambassadors sharing in a companies success.
Another company capitalizing on the energy-based drinks trend like Kahawa 1893 is Pureboost. The startup has already raised over $2.6 million from their community. The company already had substantial traction with tens of millions in lifetime revenue. But they have now leveraged that network to raise the extra funds to help fuel their growth. One unique aspect of this method of raising funds is, unlike Shark Tank, anyone can invest in offerings like Pureboost.
See more on startup investing from Benzinga.