30 Sep Real Pickles
Real Pickles is a Massachusetts-based company that makes pickles from regionally grown vegetables that are raw, vinegar-free, 100% organic, and rich in probiotics, using the traditional natural fermentation process. Founded in 2001 by Dan Rosenberg, Real Pickles is, “committed to promoting human and ecological health by providing people with delicious, nourishing food and by working toward a regional, organic food system.” In line with its social mission, the company buys its vegetables only from Northeast family farms and sells its products only within the Northeast, and the products are made in a solar-powered facility.
Industry: Vegetable pickling
Number of employees: 18
Location: Greenfield, MA
Conversion date: May 9, 2013
About the transition to worker ownership. In 2012, after 11 years in business, Real Pickles had achieved financial stability, a strong twelve-person staff, and was having a substantial environmental and social impact supporting local, sustainable food systems. The co-owners, Addie Rose Holland and Dan Rosenberg, were aware of the typical path of businesses like theirs—continued growth followed by selling out to a large industrial food corporation. In order to ensure that Real Pickles stayed small, independent, and locally-owned, and secured its social mission for the long term, the owners began looking into worker ownership as an alternative to this typical process:
“We have decided, then, to try to help re-write the standard storyline for a successful organic food business. We are interested in creating a new structure for the business which will support both its continued financial success and success in contributing to a better world. And, while neither of us have any plans to leave Real Pickles anytime soon, we want this structure to help ensure that Real Pickles can be viable in the long run by eventually coming to be able to thrive without dependence on its founders.”
Five current employees—all managers—decided to become the founding worker-owners, and met outside of work hours to drive the transition forward, collectively making decisions about the new worker cooperative, including a one-year eligibility criteria, $6000 buy-in, and institutionalization of the company’s social mission. The founding worker-owners also determined a value for the business, and then were faced with the task of finding financing for the deal that was in line with their social mission and values.
The company reached out to the Solidago Foundation, a foundation with deep financial expertise that promotes justice, equity, sustainability and enfranchisement for all. The foundation’s CFO, Jeff Rosen, introduced Real Pickles to Cutting Edge an Oakland, California-based consulting firm working to make community investment accessible and affordable to small local businesses. Real Pickles worked with Cutting Edge Capital’s then CEO, Jenny Kassan, who introduced the company to the idea of a direct public offering, or DPO. With this option in mind, Real Pickles also sought advice from the Pioneer Valley Grows, a collaborative professional organization that provides financing and technical assistance to area food businesses, and Equal Exchange, an established worker cooperative that has structured successful private investment campaigns, to determine the best way to structure the financing.
In the end, Real Pickles decided to raise capital through a DPO, offering preferred, non-voting equity in the company with a targeted 4% annual dividend. This option enabled the company to publicly solicit relatively small investments from community members. The company was able to raise $500,000 in community capital in two months, and officially became a worker cooperative in May of 2013.