Crowdfunding, or community-based financing, has not yet reached the potential of this innovative financial technology in Hungary, which is why we present a successful example from abroad in the field of hospitality.
In Hungary, too, we have seen that with the cooperation of many people, we are able to raise seemingly unattainable sums surprisingly quickly. Community financing can be a huge force not only for private purposes but also for business purposes, and the example of the Bancone Italian pasta restaurant is an inspiration for this.
Bancone's basic idea was a sure thing: to make fresh Italian pasta in artisanal conditions. The start-up was founded by Will Ellner and his business partner David Ramsay five years ago in London's Covent Garden. A second location opened in Soho the following year, in 2019, so business has been as usual.
Investors' confidence is well-founded
Their own resources were not enough to expand on a larger scale, so they turned to crowdfunding, or community-based financing. The target amount of money to be raised was £700,000, around £300 million. However, the pasta factory idea was seen as a visionary idea by no fewer than 941 investors, and business confidence was certainly boosted by the opportunity to see Bancone's operations show a positive business balance and to see what Bancone could do live in two London locations.
Restaurants serve around 4,500 customers a week, who spend an average of £30 (equivalent to at least £13,000) each, and have a turnover of around £110-120,000 a week. Their annual turnover would be the envy of any domestic catering business: their total turnover before capital injection was £3.8 million, or more than £1.6 billion at today's exchange rates.
The brand was further strengthened when Ben Waugh, former head chef of Gordon Ramsay's legendary restaurant Pétrus, a Michelin-starred restaurant, joined Bancone in a senior role as group executive chef.
The nearly 1,000 investors eventually raised £911,188, or nearly HUF 400 million, in community funding. This exceeded the original target by more than 30 percent.
How is crowdfunding different from the old investment models?
Crowdfunding, or community financing, has been booming in the fintech market for years. Well known international platforms include GuFundMe, Indiegogo, StartEngine, SeedInvest Technology, Mightycause in the non-profit sector and Patreon in the creative sector.
Crowdfunding can also take several forms. Entrepreneurs can ask for help in the form of equity, loans, pre-financing and donations. For the time being, community funding has been particularly successful in the Anglo-Saxon world, as in the case of Bancone, although a really good idea does not have to stop at national borders.
Opportunities for Hungarian hosts too
Creative Hungarian restaurateurs can also leverage the power of community funding. With a well-formulated idea, restaurateurs can enter the Hungarian and international business markets, multiplying their chances of success. This is particularly ideal for hospitality projects that are thinking of chains, including international expansion.
As with all similar terrains, many phantasmagoras appear on these platforms. The natural filter for abstract, unfeasible ideas is social like or dislike: the market reality decides. Go for it!
