How Farmraiser CEO Mark Abbott grew to $14K revenue and 30 customers in 2023.

hello everybody my guest today is mark abbott he shares a passion for farms food and community wellness with his wife and two school-aged kids he's a founding team member of americorps and past director of the poverty program at the cs mott foundation he's got a phd in economic anthropology from the university of pittsburgh and startups in the nonprofit and for-profit sectors he's the founder and ceo today of farm raiser a platform for service a platform and service for healthy product fundraising mark you ready to take us to the top let's do it all right so let's uh let's double down here on farm raiser i know you're doing a lot but what does farm raiser specifically do and what's the revenue model how do you make money so basically it's a it's a marketplace and a service that allows anyone with a healthy product to make it available for school or group fundraising so the purpose of farm raiser is to blow up the fundraising industry where that usually sells pizza cookie dough gift wrapping paper lots of goods that are high they're low value high cost with low profit for the causes so farmraiser is trying to reinvent that model by directly connecting people with great products that would like to make them available for fundraisers in their community and folks needing to make money what do you mean by by fundraising so for example i'm i'm on your site now i'm in austin i see honeycomb by the austin honey company 28.29 suggested selling price so who is the person that's usually looking at this a local grocery store no actually it's going to be like the local pta organizer so your school is going to do a fundraiser instead of asking for a cash donation they're going to sell something they would normally sell a really poor product but we're going to have them sell something grown or made in your community we sell like csa baskets for farm fresh produce or fruit or honey or coffee is a big one that we we sell a lot of there's a lot of local groceries out there so we take healthy products that are not sugar-laden junk food we make them available in a wholesale market that you as an organizer can come select those products see the wholesale price price them for retail and launch them in a crowdfunding site that crowdfunding site then would the students at your school or your cause can sell using their phones or by sharing a link on facebook or email and they can do a old-fashioned school fundraising digital this is like a healthier sexier way when i was on the tennis team back in high school and we got a box of 30 things of of kind bars or sugar like candy bars and i'd go sell them in my local neighborhood that's exactly right so we did we automated the entire process from a to z to make it really easy for an organizer to have a sale like that it's all pre-sale so we reserve product ahead of time and we made it really easy for folks that have great products that want to get new customers in their community to to make those products available for fundraising so for example the honeycombs if you want to have two or three hundred folks try your product in austin and that and then feel really good about it because it was in support of a cause they believed in and then get their email address to talk to them later about how they like the product and where they can buy it again then this platform is for you so just be clear a booster club that wants to make money though via a fundraiser what you're saying is they're going to spend money anyway on the thing that they're going to sell which it used to be maybe an unhealthy candy bar now i'm looking at the honeycomb here it's 28.29 suggested selling price if they buy all this honeycomb through you though what are they what are they paying you for the hard cost of goods sold so it's it's so no money changes hand up front it's all a pre-sale so if it says suggested retail 28 dollars they're gonna buy it for about fourteen dollars okay and so they're gonna so their wholesale cost is about fifty percent of retail in general and then they're gonna but they're gonna take a whole bunch of orders ahead of time like a pre-sale yep so our system will reserve that product for them say 300 units and they'll sell against that reservation when the sale is all done after two weeks or so we'll see that they sold 100 units the system will place an order for 100 units it will show up two weeks later for distribution with the correct forms and everything for them to use to make that day go smoothly for their school fundraiser and then they get a check from us so just the supplier gets a check from us okay so just to be clear so 50 of the the of that money that came in will basically be that's that's what the what the booster club raise the rest is 50 you're paying the actual supplier where's your cut come in so we do we have we take up from both sides of the platform we take a little bit from the supplier so by adding on a small fee to each unit sold not dissimilar to what airbnb does and then on the back side we take five to ten percent of the retail price so the end consumer is paying a little bit as well okay you're building that this suggested retail price of 28.29 has that already or you're taking that in it does it does no it is already okay um interesting okay so so i'm trying to think about what metrics are most important for you to determine if this thing is a success or not so what are you tracking number of dollars raised number of fundraisers so we track a lot of different we track about 28 different things but we the revenue driving things that we like to pay attention to are the number of campaigns on the platform okay so how many organizations come in and do a fundraising campaign with us and how many of them do a second and third one basically once you do two you're gonna do five um on average so that's our churn right we pay attention to that we also look at how much you raise so a typical fundraising campaign will sell about three thousand dollars worth of product which is which which is about 270 dollars for us right so we're watching that metric also of how much and then diving into that a little bit we're looking at what products you're selling what the average price point of the product is what the markup the price is because you can adjust your markup as an organized organizer you're not locked into a price you can actually custom make your prices if they want to take if they want to essentially raise more money for themselves yes yeah so without you know when we try to say you know we try to say listen this has got to be a great deal for the supplier because they're giving you a wholesale they're getting a wholesale pri you know price for their product which covers their costs and they're getting a customer email for every sale uh it's gotta make you at least 40 who's getting like who's getting the customer email though the booster club or the the product the booster club is selling the honeycomb company the honeycomb company is getting no i see i see so there's value for both of them well they're violating on both sides of the platform so you know to be a great marketplace you've got to have a lot of liquidity so both players have to be able to make money and see a value prop that makes sense to them so over the past let me let me get these numbers over the past 12 months over the past 12 months how many campaigns for the platform so we did about 350 campaigns okay last 12 months and you make you said on average about 270 per campaign yes okay so 270 times 350 obviously we can do that math um and then and then what is the um so we're small yet we're really just getting going i don't know by the way i don't i think small is fine by 270 times 350 campaigns that's what 100 grand in revenue for yourself something like that um but but more importantly right so let's how many like skus have moved how many products have been sold right so it so over over the course of the last three years we've sold over a million dollars in products and we've we've we've got 2600 skus available on the platform a typical campaign will will put between 3 and 10 skus in their market we coach them to keep the market small unless it's a garden seed sale or something that has many many different products in it um so we're kind of agnostic as to the number of we don't like a lot of excuses it makes the sale complex you said 2600 skus though available yes okay but they but they put two to three in the fundraiser right because you've got nationally available products they can be you can be anywhere and you can sell this product it'll be drop shipped to your school at the end of the sale or you can find stuff that's made or grown right in your community by by proximity by your neighbor yeah yeah and that's the that's kind of tapping into the share economy uh you know we modeled ourselves after airbnb frankly because we think it's a great model you've got this excess capacity of products you've got people that really want to use those products we do they meet in our marketplace and create value on both sides is there a sas component to this or it's all just 270 it's just all percentage rates there absolutely is because when we realized we were the only ones out there that managed to completely automate this product fundraising business which is about a two a 20 billion dollar industry in north america and no one has the tools we have on to manage your inventory to track your sales to actually make a crowdfunding site available by the way i get the value the product i'm just trying to understand the economics on it so who is who is paying the flat fee per month which is the sas model so the sas model flat fee are other fundraising companies so if you are a nursery and you do about a million dollars a year in fundraising it's going to take you three to four people to run that business but you can run it on our platform with one person and a distribution center so we move all of the logistics out of your fundraising business onto our platform and all you have to do is fulfillment so all your fundraising business turns into a giant wholesale account or a series of accounts that you do fulfillment for and all the other parts of the fundraising come to farm raiser and we manage it for you using our technology and what do people pay on average for that per month or per year so because our revenue model is based on transactions we we charge a very a nominal amount so it's so it's still the same it's still the same 270 then it's still like 270 on the average 3000 and raised yes okay got it so again just to be clear there isn't a flat fee people are paying for the software it's a successful fee there actually absolutely is okay but it's nominal it's between and 1500 for every fundraising company that signs up on the platform per month you're a coffee roaster you're not going to pay that because your market is that per month per year uh best per year okay 500 to 1500 per year okay and how many how many of those companies have you signed up on the platform so we've got about 30 of those companies on the platform and we add two or three a month right now okay some of them are large like equal exchange is a 70 million a year company that does you know organic coffee and tea and and chocolate um they're moving their entire catalog fundraising business onto the farm raiser platform because they recognize that there's massive value proposition for them in automating their current process got it so 30 of these folks paying caught we'll do the minimum 500 bucks per year this is a new line of business where you're doing about 1200 bucks a month right now but it sounds like you're doing this you're doing the other stuff you have a bunch of kind of ecosystem plays here the 1200 a month also translated translates into x amount of campaigns and those campaigns also pay us hold on just to be clear i thought you said that the 500 bucks or 1500 was per year not per month it is but if you're paying that per year and i'm getting 100 campaigns from you per month that 100 campaign is translating into you know i get that totally get that you just said yeah i just want to make sure you just said twelve hundred dollars per month just to be clear it's it's per year and then on top of that you're getting the percent eight percent on any things they put through you that's correct yeah yeah very cool um have you bootstrapped this or raised we've raised okay how much have you raised raised just over a million dollars okay and why raise why not bootstrap uh the technology is hard to build so it took us a while we you know we ran almost seven months worth of campaigns without writing any code because we wanted to make sure that we were actually solving some problems that people would respond to when we release the technology and then we've done two versions of the of the stack and we've also done the mobile applications so you've got a fairly heavy upfront tech cost um the we're at a place now where we can see the break even for farm raiser uh so we want to get there before we take any more money when do you think that'll happen what month um so we should be there um by the end of this fiscal year uh we should be looking at a volume that allows us to break even that's great so break even by end of year 2019 and how aggressive are you being right now in terms of investing in growth in other words are you burning 10 grand a month right now 100 grand a month so we we've we went from a high last year of around 50 grand a month we've backed that down right now as we're starting uh the season it is very cyclical for us well most of our campaigns are in in right before school's out and then right when school's back in the spring and fall so we've tamped that down a little bit most of our money right now is going supporting our direct sales for the new sas customers and our inbound marketing on facebook for the organic traffic that comes to the site finds amazing products and launches the campaign so what you're burning caught maybe 40 grand in cash per month now today we've tabbed down to around 35 that's great okay good and you've got again if you raised a million bucks obviously you have runway there so you have plenty of runway to get through this year to try and hit profitability so we've raised some money in a rolling basis so the runway is not as long as i would like it to be but so you know we're looking at runway through most of this year that's good that's good it's a you know it is not ideal but it's where we are what's the team size today so we've got a team of developers that are offshore and then i've got four full-time people here in arlington uh that work with me okay how many developments the developer yeah uh we have three uh on the development team that are almost full time and then the four full-time folks here and then myself uh and our and my co-founder my cto okay so nine people based between kind of maryland and remote uh virginia and remote yes in remote very good all right very good stuff um uh let's uh let's wrap up here with the famous five mark number one what's your favorite business book i forgot about the famous five yeah oh do you listen to the show i do i i forgot about the famous five so i don't know if i'm gonna be ready for this that's okay what's the last book you read uh that's a great question i haven't read a good book in a while that's okay we'll put none number two is there a ceo you're following or studying um of course i'm following bezos because he's gonna be my new neighbor and uh and and much of what they did in their marketplace um we like and much of it that we don't like we think we can beat them at yeah number three uh about he's literally gonna be your new neighbor in crystal city literally yes quite late same same um same um same build a set of buildings actually yeah all right number three uh what is your favorite online tool for building the company oh so we use a lot um so we we like stripe right now um you know uh because that's our pay wall and it's been very flexible for us um we do we do agile development so so we've got that set of tools um right now my absolute favorite tool because we just rolled out a whole new set of um screens is hot jar yeah jar gives me access to exactly what's happening on the platform i love it and track it all out with the user sessions it's a powerful tool number four how many hours i sleep to get every night about six and situation married single kids i've got i'm married i've got as far as i know i've got uh two high school aged kids one starting college next year one is a freshman that plays hot it's exciting and how old are you i'm just turned 52. congratulations and last question what does your 20 year old self know say that again what's something you wish you knew when you were 20 oh gosh that i sh that i should have stuck with the first couple companies i started when i was 20 and then not waited so long to do another one guys don't wait so long to get into entrepreneurship launched farmraiser a couple years ago now working with over 30 groups really doing fundraising or basically fundraising companies now using his sas platform he's got a big ecosystem play here though they're tracking many different things really replacing the old kind of high school pt booster club fundraising model with you know junk food to hey you know let your let your people sell local goods local things they take a small cut of that they've raised a million bucks to build out the ecosystem the mobile app the website uh the marketplace scaling with nine people between virginia and remote locations as they look to get to break even by the end of this year mark thanks for taking us to the top nathan that's fabulous thank you very much