Second VT Company Denied on Shark Tank Gets Financed by the Flex Fund
Posted on November 14, 2013
Growing Vermont companies are learning a valuable marketing and financing lesson: Gain widespread publicity from being rejected for financial investments on national television; return to Vermont and capitalize on an increase in sales; then seek alternative investment options from the Vermont lender offering royalty financing—a socially responsible investment that is structured like a loan with equity features. The Flexible Capital Fund, L3C, the only State of Vermont licensed royalty financing lender, provides ‘equity-like’ loans which can be repaid over a longer period of time than traditional loans through revenue share payments.
The Vermont Butcher Block & Board Company, manufacturer of high quality wood kitchen products, is the second growing Vermont company to be selected to pitch the well-known millionaire ‘sharks’ on the ABC show Shark Tank—where entrepreneurs ask for investment money in return for a share in company ownership. A year ago Liz Lovely Cookies tried and lost on Shark Tank, but won big from the national publicity and uptick in sales--positioning them favorably to become the fifth investment in the expanding socially responsible investment portfolio managed by the Flexible Capital Fund.
Vermont Butcher Block has followed suit and is now the Flex Fund’s sixth investment. In October, 2013 the Flex Fund closed a $250,000 investment deal for the relocation and expansion of the business, and permanent working capital to grow.
“We saw a 299% five year increase in revenues to just under a million dollars in 2011,” states owner David Glickman. “In 2012 annual sales plateaued—primarily due to the lack of manufacturing space, inventory storage, and cash flow constraints. We needed bigger, more efficient space and equipment to grow—or we’d stagnate.”
Having operated out Glickman’s residential home in Williston, Vermont since 2004, Vermont Butcher Block has outgrown their existing space and have been facing production inefficiencies that are negatively impacting cash flow. Three different buildings located at the top of a steep driveway, inaccessible to most raw material wood supply trucks in winter, are insufficient in meeting current manufacturing capacity.
Expanding operations to a 6,000 square foot industrial and light manufacturing space on Boyer Circle in Williston will allow Vermont Butcher Block to consolidate operations including shipping and receiving as well as provide more functional office space. Increased storage space will alleviate delivery challenges and raw materials can be more efficiently received and stored.
“The Flex Fund is the only revenue-share financing option in Vermont which allows loans to be repaid based on growing revenues rather than through the sale of the company (in the case of equity ownership, which is how the ‘sharks’ would have invested),” says Janice St. Onge, president of the Flex Fund. “Vermont Butcher Block’s growth has come through increased sales of manufacturing products, the opening of their downtown Burlington retail outlet in 2010, and the acquisition of a small woodworking company in 2011. We believe they will offer our investors a fair return on their financial investment, and their growth will have positive impact on the working landscape through job growth, local purchasing of Vermont and regionally grown/sustainably harvested wood, and support of Vermont food products and the Vermont brand of quality.”
“We use the word ‘Vermont’ in our company name because we love this state. Vermont is truly a special place that stands behind its people and communities. After 10 years, our proven home-based business, Vermont Butcher Block & Board, just outgrew its production capacity and we had to do something to keep up with demand. Several additional out-of-state funding options that involve giving up equity presented themselves, but as a Vermont-based business, it felt right to choose the Flex Fund. Not only do we keep 100% equity in our firm, but the ‘Vermont’ in our name has new meaning as we get to give back to the community in our own way,” says Glickman.
The Flex Fund leverages the stability of a loan with the flexibility of an equity investment to offer financing patient enough for agriculture, forestry, and clean energy companies to ramp up their growth in a sustainable way. The Flex Fund provides critical non-financial support through peer-to-peer network resources, mentorships, and technical assistance and will help Vermont Butcher Block strengthen their commitment to growing the local supply chain and supporting economic growth in Vermont.
The Vermont Butcher Block & Board Company, founded in 2004 by David Glickman, manufactures and sells premium quality wood kitchen products in the housewares market including bowls, cheese boards, cutting boards and butcher blocks, and kitchen utensils. Products are sold online, through over 300 wholesale channels, at downtown Burlington retail store, and to corporate and restaurant clients. Committed to sustainable forestry and the Vermont economy, wood is purchased locally and sourced from managed forests across Vermont and the region. www.VermontButcherBlock.com
In Vermont’s growing pool of socially responsible investment options, the Flexible Capital Fund, L3C provides flexible risk capital to Vermont food, forestry, renewable energy, waste management, and environmental technology companies. The Flex Fund seeks not only a fair return on its financial investment, but is equally focused on the social and environmental impact borrowers have in building healthy food systems, re-localizing energy resources, and creating resilient communities. The Flex Fund is managed by the Vermont Sustainable Jobs Fund, a non-profit organization charged with developing Vermont’s sustainable agriculture, renewable energy, and forest product businesses. www.vsjf.org/what-we-do/flexible-capital-fund