Protein for Pets co-founders Marco and Berenice Giannini are changing the way people shop for pet food. Their strategy is simple: Offer high-quality products at a good price, and provide an easier way for consumers to shop by organizing pet food according to protein and product type, instead of by brand.
So far, the strategy is working. Protein for Pets opened its first location in March 2014, and the company has already opened an additional nine retail stores throughout Southern California.
“We have a small-store format with low overhead, which is not only easier for the consumer to shop, but it also provides a fast return to the investment community,” says Marco Giannini, Pets for Protein’s CEO. Prior to starting Protein for Pets, Giannini founded a dog food and treat company called Dogswell in 2003. He sold Dogswell in 2008 but continued as CEO until leaving the company in 2013.
Giannini says that if Protein for Pets really wants to take hold of the competition, it will have to expand at an even faster pace. By the time the seventh store was built, he says he and Berenice, who is the company’s chief operating officer, had started to think about getting outside funding, which can be a time-consuming process.
After considering several other potential sources of financing, they chose CircleUp, an online platform that focuses on helping entrepreneurs raise capital from a network of accredited, or wealthy, investors.
“We went to CircleUp because it’s the next generation of funding — it’s like Facebook for funding,” Giannini says.
An equity crowdfunding platform
CircleUp partners with early-stage consumer product and retail companies in such fields as personal care, apparel, retail chains and restaurants.
“We partner with those companies, and they join our community and our platform, to connect with and hopefully raise capital from a community of angel and private equity investors,” says Pat Robinson, business development manager at CircleUp.
The average company on CircleUp has a little over $1 million in annual revenue, and almost all have at least $500,000 in annual revenue, so they are a little bit later-stage than a startup.
“They generally have a product on the shelves — or in Protein for Pets’ case, they have stores that are built and they’re selling products,” Robinson says. “So they want to raise more capital to produce and sell more products.”
Robinson says CircleUp’s application process can be completed online in less than five minutes. The company asks for “high-level” information, such as revenue in the past year, growth rates and gross margins.
From there, the company reviews each application and gives feedback within a day or two. Not every company gets accepted — in fact, CircleUp accepts only about 5% of all applicants, Robinson says. That’s why he says it’s important to really make your company stand out from others.
“Our best advice would be to have a product and a brand that really solves a problem and that is out there in the marketplace, and it’s differentiated,” Robinson says. “If you have something that’s sort of new and innovative that’s solving a problem for consumers … that’s going to translate into a growing business with growing sales and distribution opportunities.”
More potential investors, less time searching
The advantages of raising money at CircleUp include tapping into a wider network of potential investors who have experience in your business sector, Giannini says.
“It’s obviously very difficult if you’ve got your 10 wealthiest friends, and five of them say yes and the rest say maybe or no. … Where do you go from there?” Giannini says.
CircleUp “allows you to get a lot more people and a lot more prospective investors in,” Giannini says. “I’m speaking with someone next week who’s from Cincinnati. Last week I had a conversation with someone from New York. I’ve had conversations with people from all over the place.”
CircleUp’s community of investors is also well versed in brands and consumer products and can offer strategic guidance and support, Robinson says.
“These are folks that want to be brand ambassadors and be supportive, ‘value-add’ investors along the way,” Robinson says. “We only focus on [consumer-oriented businesses], so the investors in our community come to us knowing that we’re only going to show them high-quality consumer investment opportunities that they can be excited about.”
Protein for Pets is still in the process of raising equity from CircleUp, and the company is trying to raise up to $3 million in equity or 30% of the company, Giannini says.
The funds will be used to open new stores (which cost only $50,000 to $60,000 each to build, as the company uses “really simple recycled materials,” according to Giannini), to build out the management team and support staff, and for marketing. The company plans on growing very fast, as it aims to open 10 stores a year for the next two to three years, and within five years, have 100 locations in total, Giannini says.
Tips for other entrepreneurs
For business owners accepted on the CircleUp platform, Robinson says it’s important that they prove to investors not only that their product is great, but also that they’re offering a good investment opportunity.
“We always encourage entrepreneurs to engage and be proactive with investors, in the same way with selling their own product,” Robinson says.
Small business owners and entrepreneurs seeking financing at any stage should have already proven their concept and have sales coming in the door, Giannini says.
“In order to get financing — whether it’s $100,000 or $10 million – you need to prove concept,” he says. “If you can prove the concept, you’ve got to open up your stores if it’s a store format, you’ve got to sell some consumer goods, you’ve got to ‘make a little, sell a little.’
“If you’re selling a physical asset, it’s got to be something you can touch and feel,” Giannini says. “If you’re selling something that’s online, you’ve got to have the website up or the app up. You’ve got to have something investors can wrap their arms around.”
Giannini hopes to close this round of financing within the next couple of months.
“I think the more enthusiasm we provide and put themselves out there, people will come around and realize that we’re really doing something that can change the paradigm of pet shopping,” Giannini says.
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Image of Marco Gianinni courtesy of Protein for Pets.