Stricter EU requirements suffocated Coop's entrepreneurial incubator

Since 2017, Coop Crowdfunding has helped a large number of organic entrepreneurs and several established food producers raise capital for product development and growth. However, after nine years, the platform has now been completely shut down, which disappoints Johanne Schimming, chairperson of the Small-Scale Production Committee at the Organic Association. She has been a frequent user of the platform herself and had one of the last projects on the portal before the door to Coop's crowdfunding universe closed on June 1st. "It's very unfortunate that Coop is stopping crowdfunding, which has made a big difference for my own and many others' businesses, but it doesn't come entirely as a surprise to me, as the number of projects has declined recently," says Johanne Schimming. She has raised money on the platform five to six times for her social-economic organic farm Hegnsholdt near Lejre in Mid-Jutland, which has received support to set up and later expand the farm's bakery. Through her professional work at the Organic Association, she knows a large number of organic entrepreneurs who have used Coop Crowdfunding to both take out larger loans and for so-called reward projects, where supporters of the project are rewarded with a new product, an experience, or a discount. New EU regulations destroyed the economy Annette Jorn, CEO of the association Coop a.m.b.a., can easily understand that it is a blow for the country's small-scale producers that a financing option has dried up. "The reason we decided to close Coop Crowdfunding for new projects is the EU regulations for crowdfunding that came into force in 2021 and have since been further clarified. The regulations have tightened requirements for, among other things, credit assessment, documentation, compliance, and ongoing supervision," says Annette Jorn to Organic News and continues: "Therefore, it is no longer possible to maintain a sustainable economy in Coop Crowdfunding within the frameworks and scale we operate in." Coop Crowdfunding was originally established to bring consumers and producers closer together and to renew the cooperative spirit in a modern context. Annette Jorn is pleased with the many projects and entrepreneurs that were helped along during the platform's nine-year lifespan. In practice, it has functioned as a kind of entrepreneurial incubator, where users could both test interest in their ideas and products and simultaneously raise capital to scale production. In this way, Coop Crowdfunding has contributed to creating new relationships and providing space for sustainable ideas and products, many of which are still on the market. On the other end of the scale, Thise Dairy only needed 35 minutes to raise a loan of one million kroner through Coop Crowdfunding. The money came from 147 consumers who wanted to help Salling Dairy realize plans to phase out imported soy from the cooperative members' feed and replace it with domestically grown alternatives. Fejø Fruit, Frankly Juice, and Herslev Brewery also used the platform to secure larger loans. The latter obtained a million-dollar loan to establish a restaurant connected to the microbrewery in Mid-Jutland. "We are proud of the results and experiences that Coop Crowdfunding has created, and we want to thank everyone who contributed either as project owners, backers, or partners," says Annette Jorn. Too small to borrow money from the bank Johanne Schimming is certain that it will become somewhat more difficult for especially small entrepreneurs to establish themselves in the food market in the future. "A company like mine is too small for banks to bother lending me money," says the Jutland-based entrepreneur, who herself had one of the last active projects on the platform. Over the years, she has crowdfunded money to establish a raspberry production at Hegnsholdt and to set up a farm shop. During the pandemic, she also received support to get through the pandemic intact via crowdfunding, which most recently helped finance the setup of a farm bakery on the farm in Lejre. "I believe Coop Crowdfunding has been a great success, and its closure is a loss for developing a more diverse product range." Johanne Schimming also points out that crowdfunding was not only a shortcut to raising money. For many, the exposure of their business and products was just as important, but they will now have to find other platforms. "The decision is not due to a lack of belief in the idea. On the contrary, Coop Crowdfunding over the years has shown how the cooperative spirit can be developed and used in new contexts. Everyone involved in creating it can be proud," says Annette Jorn. Local products are embedded in our fabric and DNA However, the closure of crowdfunding does not mean that Coop is turning its back on local producers, emphasizes Annette Jorn: "There are 20,000 completely local products on the shelves, and you would need to visit more than 400 Coop stores to taste them all. Coop has the most extensive retail network among all in the grocery sector, so support for small Danish and local producers is woven into our fabric and DNA," says Annette Jorn. Last week, Coop held a supplier Saturday for small and medium-sized Danish producers. "It was a day of advice and sparring on how to become a supplier to retail, and we continue to guide and help many local producers. We feature them in Samvirke and tell many good stories whenever we can. But of course, it also has to make economic sense for us, and the crowdfunding platform was ultimately not sustainable," concludes Annette Jorn.