An Edmonton-based frozen food innovator is extending its equity-crowdfunding campaign to give supporters more time to help fund its expansion.
Uproot Food Collective's fundraising effort on FrontFundr was set to expire next week, but the company has decided to extend it by 90 days, giving it until December to raise its goal of $570,000, co-founder and CEO Chris Lerohl told Taproot in an email this week.
The company plans to use the money for expansion across Canada and, eventually, into the United States.
"If we can get the capital, then we can expand market and expand into a bigger business, open up to more local food, and really grow the business," Lerohl said in an interview before the extension. "We believe that we have a business opportunity that's worthwhile for people to invest in."
The campaign, which launched in June, has raised $225,000 from 34 investors so far. Lerohl attributed the shortfall to a later-than-planned start and the distractions of summer holidays. "In late June, we were doing fairly well," Lerohl said. "Then summer hit and it just kind of went down."
Unlike platforms such as Kickstarter, FrontFundr backers are investors rather than recipients of perks (though there are perks associated with Uproot's campaign as well). The platform allows non-accredited investors to get in on the action, which differs from other forms of investment.
"It allows private companies to almost act like a publicly traded company," said Lerohl, who used to work in business development at the now-defunct TEC Edmonton. "It goes back to my days in the innovation ecosystem … one of the things that always kind of irked me or frustrated me was that I wasn't able to get in the deal flow, and I wasn't able to get in on the investments because the regulations only allowed accredited investors."
Uproot, a vertically integrated "scalable commercialization platform for growing authentically original brands," sprouted from Honest Dumplings, a frozen dumpling company Lerohl co-founded with his wife Ray Ma in 2014.
Around 2016, he mentioned to farmers' market neighbour Jamie Scott of South Island Pie Co. that he saw a gap in scale-up opportunities for food companies. Uproot was soon born, involving a merger with South Island and an equity acquisition of chocolate brand Natural Kitchen Delights (commonly referred to as NKD). Today, it has an office, production facility, and retail storefront at 10552 114 Street NW and an e-commerce platform called Uproot Food Store. The food store carries more than 80 Alberta brands and serves customers in 85% of Alberta.
Equity crowdfunding is possible in part due to harmonized regulations for startup crowdfunding implemented in 2021 by the Canadian Securities Administrators. For this campaign, non-accredited investors can ante up between $500 and $10,000. The minimum amount also applies to accredited investors, but they are not subject to the $10,000 maximum.
"It's probably best for someone to have an accountant read the offering document," Lerohl said. "You're not actually initially becoming a shareholder because it's under this convertible note, which is very often used and kind of more attractive for VCs because it gives them an option."
The offering document lays out how the company plans to leverage the money. Lerohl emphasized that he and FrontFundr are forbidden from making promises of return on investment. Put in the simplest terms, the convertible notes should either offer a discount on shares or act as a debt-financing mechanism, depending on Uproot's future.
Almost all those who have invested so far are existing Uproot customers. But Lerohl said the company has attracted attention from about "a half dozen" venture capitalists, each of whom found Uproot via FrontFundr. When he spoke to Taproot, Lerohl was in Vancouver to take a VC meeting and meet both a potential co-packing partner and a last-mile delivery service provider.
"This awareness hopefully can help us to maybe get the right person that can (entice a big investor to) put in a million dollars, or two million, or whatever, that allows us to really go big quick."
So what specifically does Lerohl plan to do with the funds? For now, the main goals are to focus on expansion to B.C. and Ontario. He also plans to continue to grow in Alberta, which includes adding a retail store in Calgary. Expansion requires increasing inventory and packaging, expanding the Uproot team, additional manufacturing equipment, and growing the roster of local brands available.
"We need to achieve the next stage of growth. And that $570,000 puts us in a really strong cash-flow position to really fuel our growth as we start to get kind of early days into B.C. and Ontario," he said.
Further down the line, Lerohl wants to go Canada-wide and expand gradually into the United States. He doesn't know whether he'll stay in the driver's seat forever, as he and his team want to either sell the company or become publicly traded. He said if things remain innovative, though, he could see himself sticking around.
"I would love to continue finding ways to innovate and grow and create new things, but I wouldn't want to stay in it forever if all we did was make Honest Dumplings and meat pies," he said.
Success is already in sight for Uproot in B.C. The company reported more than $20,000 in pre-orders in the first two weeks after launching in late July. Uproot currently serves the Okanagan and Lower Mainland with its three owned brands. Partnerships with a co-packer and a last-mile delivery service should allow the company to expand both its offerings and geographical reach.
Lerohl also promised a big push for NKD to coincide with a rebranding that will roll out in the next six months or so.