In 2018, CERO was a winner at the Massachusetts Sustainable Business Awards. A few years prior, Cutting Edge Capital helped them complete a successful DPO. Listen to CERO general manager, Lor Holmes reflect on their experience and give advice to other organizations interested in direct public offerings.
Seventeen years ago a small pickling company called Real Pickles, based in Greenfield, Massachusetts, became dedicated to changing the food system. Owners Addie Rose Holland and Dan Rosenberg practice traditional fermentation using only produce sourced from local family farms. Their pickles are a representation of how they operate their mission driven business — with meticulous care.
Part of Real Pickles’ vision to change the food system included transitioning their business into a worker-owner co-operative to actively support their workers and demonstrate a working model for other food businesses to follow.
Twelve years after Real Pickles was founded, Addie and Dan began the process to worker-owned co-operative by evaluating capital raising strategies to successfully make the transition. They chose a direct public offering (DPO) strategy (that Cutting Edge Capital structured and advised on), finding that a community capital raise aligned with their mission to build up community.
After five years of settling into the success of their direct public offering, Real Pickles co-owner Addie Rose shared with us where they are now and how they got there.
What is Real Pickles?
Real Pickles is a worker-owned co-operative on a mission to build a better food system. We make traditionally fermented pickles, sauerkraut, kimchi and other vegetables that are nourishing and rich in probiotics. We source all of our vegetables from family farms in the Northeast and sell our products only within the Northeast region.
When did you begin your first raise?
We started our first direct public offering (DPO) community capital raise in the spring of 2013. The purpose of the raise was to finance our transition to a worker co-operative.
What was your goal amount and how long did it take to reach it?
Our goal was $500,000.00 and we reached it in less than 2 months!
How did you network and market to raise capital?
We started planning our networking and marketing efforts several months before the offering was approved for release. We attended many events to maintain a high awareness of our brand, and practiced a carefully-crafted message. Connections with like-minded partner organizations, including our regional Slow Money chapters and other businesses with investor connections were important for spreading the word. After twelve years in business, Real Pickles enjoyed strong community support, and we were able to leverage our years of networking and marketing to reach out to our community for this raise. See this resource for more information on our process.
What was challenging about the direct public offering process?
Initially, we were expecting to work with a local attorney that could support us through the legal process of setting up a DPO. After many discussions with local firms, it was clear that we’d need to work with someone who had specialized knowledge of the securities regulations and process, as well as the interest in working with a small business (with limited resources). We were introduced to Cutting Edge Capital and found our match!
What was your favorite aspect about the DPO process?
It was heartening to see how excited people in our community were to invest locally. Many people in our area are committed to local eating and shopping, but there aren’t many opportunities for local investing. The popularity of our raise demonstrated that there is an appetite for this kind of community investment opportunity!
What are the longstanding results of the capital raise? And what have those results allowed Real Pickles to accomplish?
Our capital raise allowed Real Pickles to transition to a worker-owned co-operative, with all of the anticipated benefits to our employees and our larger community (see here, here, and here). In addition, we gained a fantastic group of community investors, many of whom were longtime customers or suppliers, who as investors are now even more committed to our business and our mission!
Discuss the expansion of your team and the growth of your business.
Since our transition to a co-operative, we have doubled the number of worker-owners on our team (from the founding five worker-owners) and our business has continued steady growth. The new energy and ideas that new owners bring is welcomed by everyone. We feel that our business is stronger than ever, and that our team is well-prepared to guide our business into the future.
Back row, L to R: Kristin Howard, Tamara McKerchie, Heather Wernimont, Andy Van Assche, Brendan Flannelly-King. Front row, L to R: Annie Winkler, Addie Rose Holland, Lucy Kahn, Katie Korby, Dan Rosenberg.
Why did you choose the cooperative structure?
The purpose of our conversion was to demonstrate an alternative model for a growing natural foods business that keeps ownership local, supports our employees, and protects our strong social mission into the future (see here).
Have you noticed more interest or response to direct public offerings in general in your own community after Real Pickles’ success with a DPO?
There has been a lot of interest in community capital raising since our DPO. In fact, our neighbor Artisan Beverage Co-operative made a similar raise within a couple of years after ours – as well as CERO in Boston. Many other business owners have reached out to discuss possibilities. It is great to see that this method of community investment is gaining momentum.
Share three key pieces of advice you have for business owners looking to go the direct public offering route.
What are you most excited about for the future of Real Pickles?
I’m excited for more and more workers to become owners at Real Pickles, and I love to see our workers practicing the art of ownership. Our business is in good hands for a future of smart growth, meaningful jobs, and partnering with our community to build a better food system!
If you’re interested in direct public offerings or transitioning your business into a worker-owned co-operative, fill out our contact form here or email us at info@cuttingedgecapital.com.