Where are you at with the Burrito Bond, and how will you use the funds?
The bond closes on 26 August at 11.59pm, and we’re currently at over £1.8m with over 600 people.
We chose a completely arbitrary length for the original campaign, and in its last week we got a surge of investment of over £282,000, so given the demand and the fact that we have sites on the horizon beyond the next three, we kept it open. But this time we’re wrapping it up.
The funds will go towards the three sites we talked about in the Burrito Bond’s invitation document. Two of them are already in development – Camden High Street and Soho, and then we have a third site that we’re in advanced legals on. So the funds will help us develop those sites, and any leftover funds will go towards further sites that we’re planning for 2015.
How was your first mini-bond experience?
Sensational, excellent, amazing, fantastic... I have no complaints whatsoever with it, and the experience has surpassed all our expectations, as well as the industry’s.
We got coverage from publications ranging from the Wall Street Journal to The Economist, and we did live interviews on six different TV stations, which is absolutely phenomenal.
More to the point, we raised all the funds we needed and then some, and now have over 600 brand ambassadors out there on the streets of London, not only funding and participating in our success but most certainly helping us sell and promote Chilango’s business.
Would you consider resorting to crowdfunding again in the future?
Absolutely. We have proven to ourselves that it’s a very viable route for debt financing. Not only that, but it’s also exciting to have spearheaded this new route for SMEs throughout Britain. When the time comes to raise more debt, our options will include a follow-up bond as well as traditional routes such as the banks.
What makes crowdfunding a good financing option?
The reason we did it is because it fits with our brand. You can find my mobile number on guest comment cards at any Chilango, so from day one we’ve always believed in maintaining a direct relationship with our guests – that’s part of how we think.
When it comes to the banks, we’ve had a banking relationship with HSBC from the business plan stage so not only did we bring banks into the business but we did it when we were a piece of paper.
We were 50 per cent funded by HSBC before we got our first restaurant open. We’ve had that relationship over the last seven years and before we decided to take the Burrito Bond route we were in the midst of discussions with three high street banks, but at the end of the day this is something that just made sense to us and really fit our brand. It proved to be a huge success so, good decision.
Is there anything to watch out for when putting it in place?
The more you invest in your initial pitch, in terms of video and documentation and the whole sales story, the better the outcome.
The difference when you do it this way, compared to having a face-to-face conversation, is that in a conversation you can kind of adapt and improve your pitch as you go, but with this it needs to be razor-sharp from the outset because once it’s live, that’s it.
That’s what people are basing their investment decision on. We invested a lot of time upfront to make sure that the video and the invitation document communicated all the things that we thought were critical to help someone make an investment decision.
Are there any limits to Chilango’s expansion?
We think the potential for fresh high-quality Mexican food in the way we’re doing it is something that appeals to the public, not just in London and the UK but globally, so our plans for Chilango are quite massive. We’d like to continue opening new restaurants year after year, but for now our focus is simply on using the funds raised from the bond to get the next three open.
The biggest secret to our success as a company has been carefully choosing who we work with, both internally on our team, and who we take on as investors, business partners and suppliers. The real reason the Burrito Bond has been as successful as it has been comes down to meeting a couple of like-minded people at Crowdcube. Without that kind of sound partnership I don’t think we’d be talking about the Burrito Bond right now.