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Scout chats with David Nelson, the director of Melbourne restaurant Sash, about public funding in an industry typically built on private investment.
You’ve got your venue going, established yourself in an over-saturated market and managed to turn a decent amount of profit – all while building a loyal customer base. What comes next?
Many businesses reach this point and decide to expand, turning to private investment for funding. Faced with this situation, Melbourne-based Japanese fusion restaurant Sash is taking a less conventional route – creating a profile with Birchal, an equity crowdfunding platform that connects brands with public investors.
As a hybrid investment platform, Birchal creates profiles for private and unlisted public companies and allows investors to buy shares in them – the perfect solution for Sash director David Nelson. “We really saw the benefit in it,” he says. “People not only become your investors, they become your best customers and your best promoters.”
Sash is an Australian take on modern Japanese fusion. Bridging what Nelson calls an “untapped space” between casual and fine dining, the Windsor restaurant puts a Japanese twist on dishes such as pizza, sliders, nachos, tacos and cocktails – with more traditional plates on the menu, too.
Sash has enjoyed success in its first two years, serving eye-catching dishes every night of the week. On top of this, they’ve managed to amass nearly 35,000 followers on social media and build enough of a brand to open in Sydney, with plans for another restaurant in Brisbane
Private investment has been successful for Sash – helping them open in Melbourne in 2018 – so why turn to public investment for expansion? Nelson says crowdfunding is a great way to build brand awareness and gain publicity.
“You can either have one private investor in for $150,000, or 150 private investors in for $150,000 [altogether],” he explains. “For the brand, promotion and word-of-mouth, we thought that more investors would be a much better model.”
But sourcing money this way isn’t all about publicity – turning to the public for investment has other benefits.
Crowdfunding is a great way to raise revenue with no upfront fees, and you don’t have to apply for high-interest bank loans. There’s also less risk involved for potential investors, and it’s an effective way to test the public’s reaction to your product or business.
Despite the benefits, Nelson says Birchal’s model doesn’t necessarily make things easier than seeking individual, private investment.
“It’s quite a difficult process. We thought people would part with their cash a bit more easily,” he says. “[But] asking someone to part with $10,000 warrants a similar amount of questions to someone parting with $100,000.”
Sash has raised nearly $185,000 in a campaign Nelson describes as “moderately successful”, but no business decision comes without risks. We ask Nelson to share some tips for other hospitality businesses looking into crowdfunding.
“You have to create a story. You really need a story more than ever. The more unique you are, the better,” he says. “Your [storytelling] ability should determine whether you [crowdfund] or not.”
You need more than just an exciting backstory to attract crowdfunding investment, and Nelson says a broad, unique product range is another vital component.
“You’ve really got to have the right product or offering,” he says. “We decided on a whole category of Japanese pizzas and knew that wasn’t enough, so we thought up more items like tacos and nachos – putting a Japanese twist on a bunch of dishes and cocktails.”
Finally, Nelson says investors need to see potential for return on their investment. What Sash offers their investors is the chance to be part of an expanding Australian brand with concrete plans to go global.
“You just need to make sure that the reward is enticing. If you can’t show a dividend projection, then you might struggle,” he says. “People aren’t going to put in money if the reward isn’t that exciting.”
Don’t worry if you’re yet to get your business off the ground. Nelson says there are advantages to not yet having a tangible product.
“There’s a power in raising capital when you’ve just got a concept,” he says. “For some reason, people like to invest in things that haven’t launched yet. They feel like they’re getting a better deal because they’re in early.”
If potential investors are looking to get in early, now is the time. Sash plans to open more five restaurants in Australia once the Sydney and Brisbane franchises are fully operational, with talks to launch a store in Los Angeles in 2020.
Beyond that, Nelson is unsure where the business might end up – but he definitely wants to go global. “I think Italians might be a bit offended that we’re putting sashimi on pizza, but it might do alright in Japan,” he says. “It’s not very traditional, but they might be able to see the fun in it.”
Photography: Jake Roden