When advertising photographer Smári Ásmundsson told his now business partner Doug Stewart that he wanted to launch his own brand of organic Icelandic yogurt, Stewart paused for a moment. After standing at the helm of his own organic sorbet and gelato company for 10 years, Stewart knew what an uphill battle this would be.
“In any industry that you go into, whether food or technology, you need a margin, and these are industries where that’s really hard because they’re so hypercompetitive,” Stewart says.
And yet after listening to the native Icelander’s plans, Stewart determined that Ásmundsson’s marketing expertise and passion for his home country’s traditions were a winning combination that could very well help drive a successful business.
After deciding to name the company Smári Organics, the duo began thinking long and hard about how best to introduce their product to an American audience.
Smári Organics’ growth
Ásmundsson came to California to study photography nearly two decades ago and quickly established himself as one of the leading advertising photographers in the country. But around 2011, he decided it was time for a new project. According to Stewart, the Icelander had been toying with the idea of making a foray into the food industry for some time.
Yogurt, as it turned out, ended up being the vehicle that would enable Ásmundsson to do so.
“In Iceland, yogurt really is their marquee food product,” Stewart says.
A staple since the ninth century, Icelandic yogurt is much more concentrated than other types of yogurt, making it rich in vitamins and nutrients. A 6-ounce serving of Smári Organics’ yogurt contains 20 grams of protein. Its production process calls for a lot of straining, which is both arduous and time-consuming.
“We had to go with the Icelandic approach, which is slower and more expensive but makes a better product. This also meant we were asking companies to install brand new equipment for straining,” Stewart says.
With the help of a family friend, Ásmundsson soon learned how to make Icelandic yogurt. Although he was equipped with vast amounts of marketing and branding knowledge, Ásmundsson lacked experience in business operations, which prompted him to call the more entrepreneurial Stewart, whose organic sorbet became the top-selling product of its kind in the country.
While Stewart was busy planning the logistics and business side of Petaluma-based Smári Organics, Ásmundsson began bringing in top-notch talent from the world of design and content creation. In Stewart’s mind, the company’s clean aesthetics, from its website to its packaging, is a direct result of Ásmundsson’s background in advertising and his ability to get the best people on board.
Smári Organics eventually partnered with Westby Cooperative Creamery in Wisconsin, which started producing the yogurt at the end of 2012. The yogurt is currently available in four flavors: strawberry, blueberry, vanilla and pure, or plain.
Though business was doing well nine months after producing the first batch of yogurt, Ásmundsson and Stewart agreed that outside financing would allow them to invest in more equipment and thus make more yogurt. The duo turned to CircleUp, a popular crowdfunding platform, to get the funding they needed.
Smári Organics’ work with CircleUp
Founded in 2011, CircleUp is a San Francisco-based crowdfunding platform on which consumer and retail companies can raise capital by selling equity. Accredited investors can browse through CircleUp’s website to determine which small businesses they want to back.
CircleUp focuses solely on consumer and retail businesses, which separates it from the many other crowdfunding platforms on the Internet.
“We’re really excited about people building great products or retail concepts,” says Patrick Robinson, a business development associate at CircleUp.
Part of what makes CircleUp such a popular platform, Robinson says, is that his team is keenly tuned in to the financing needs of consumer and retail businesses. This attracts investors who are also savvy about these particular kinds of small businesses, which in turn draws companies like Smári Organics to the website.
“Financing is a constant challenge because the market is really competitive and you have to be really significant in terms of scale in order to break even or be profitable,” Stewart says. “We were looking for $1.5 million, and at that scale CircleUp had proven itself.”
Ásmundsson and Stewart were introduced to Ryan Caldbeck, the founder and CEO of CircleUp, through one of their previous investors and brokers.
“They were immediately interested in putting us on the platform and it was really quick and incredibly professional,” Stewart says.
After a successful campaign, Smári Organics met its target fundraising goal, which helped it pump money into equipment and infrastructure.
From peer-to-peer lending to venture capitalists, entrepreneurs have a range of options when it comes to small business financing. For Stewart, taking the crowdfunding route was a no-brainer.
“We chose to go with a crowdfunding mechanism for a couple of reasons,” Stewart says. “Number one, the sheer magnitude of the eyeballs looking at the deal. If you’re trying to generate leads organically it can take forever. With crowdfunding, you get a real sense of what value the crowd thinks you’re worth.”
“The number two reason that we went with them was that we thought we might get some exposure from the media,” Stewart says. “And it turns out we got a lot.”
Smári Organics’ CircleUp campaign helped them land an article in the Wall Street Journal business section, thus securing the type of visibility Stewart had hoped for at the start of the company’s crowdfunding push.
Tips for budding entrepreneurs
Anyone thinking about starting his or her own small business needs to be strategic about which industry they choose to enter, says Stewart.
“Unless you have a genuinely disruptive business model and technology, I would avoid industries where there is an obvious monopoly player or players that control distribution and shelf space,” he adds.
As for what lies ahead in 2015, Stewart and Ásmundsson hope to develop new products while expanding beyond their core market of organic, specialty, and gourmet shops.
Though it’s been on shelves for less than two years, Smári Organics’ yogurt is already available in every state, and there are no signs that business is going to slow down any time soon.
“Our yogurt has an opportunity to be a mass market product, and so wouldn’t it be cool if we were in Walmart and Target in 2015 and beyond,” Stewart says.
Photo courtesy of Smari Organics.