Raising Capital for an Alpaca Farm

Raising Capital for an Alpaca Farm

Q: We are interested in starting an Alpaca farm. Do you think this is something investors might be interested in investing in?

A: There are a whole host of dimensions that you should consider in terms of attempting to raise venture capital for any opportunity, let alone an Alpaca farm. See our other blog posts on raising capital to give you a sense for the difficulty and complexity of the process when you try to raise capital for any business.

But let’s say that you decided to press on and you do raise some capital from an investor. In other words, you were 1 in 4,000, you have the best business plan the investor had seen all year, you offered the best return, and you were the most impressive entrepreneur they had met that year, etc. What might it look like if you did take investment capital to fund your Alpaca farm? I will get creative here and give you two completely made up scenarios of what it might be like:

  • Dream Scenario – You gaze out of the picture window of your historic farmhouse at the Alpacas grazing peacefully in the meadow. You are exceeding plan, all of the Alpacas are healthy and thriving, your investor is happy, and life is grand.
  • Nightmare Scenario – Your investors grind you down with daily emails demanding to know what you are going to do about the falling prices of Alpaca meat and wool (turns out Alpacas were a fad and not a sustainable trend); demanding to know what you are doing to lower costs; and demanding to know when they are going to get their money back. You slog through the daily animal chores questioning how a small herd of Alpacas can suck up so much of your waking hours and wondering why you ever thought it was a good idea to enslave yourself to such a demanding investor.

As an alternative to raising venture capital, here are two suggestions on what I would recommend instead:

  • See What It Might Be Like – Manage a farm with an animal operation for a friend for at least two weeks while they go on a much-needed vacation. This should give you a sufficient indication for what it takes to take care of animals.
  • Creative Ideas for Launch – If you already have a farm, just start with one pair of Alpacas – rather than an entire herd – to limit your risk and to see if you like the animals and the work necessary to care for them. You can also test your ability to market your output. If all goes well, you can grow your herd from there. If you do not already own a farm, find a friend with a farm and lease enough pasture from them for your initial pair of Alpacas so you can test your idea. This should keep your costs and risks much lower while you work to perfect your plans.

Recommended Resources

Document Downloads:

  • Business Development Documents (includes various document and agreement templates for business planning and growth)
  • Startup Financial Model (to help you plan and operate the financial aspect of your business or acquisition and a key part of any attempt to raise venture capital)

Ask an Expert:

Training:

  • Venture Academy (includes nearly 200 videos of entrepreneurship training – focus on the Finance and Accounting section and in particular on how to capitalize a business)

About Wade Myers

Wade has founded or co-founded, invested in, and been a director of over 25 companies and has completed 55 financing and M&A transactions. His previous work experience includes the Boston Consulting Group and Mobil Corporation. Wade also served as an Airborne Ranger in the US Army where he was a decorated veteran of the Gulf War. He is a Baker Scholar graduate of Harvard’s MBA program and is married with five children.

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