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Iggy's Foods startup expands thanks to community-based loans

"Iggy" Daga, left, and Sean Matteson are ready to expand their business selling fermented vegetables by at least doubling production capacity.Ilgvar “Iggy” Daga has long been known for his fermented vegetables, popular at parties and gatherings. With 30 years of fermenting behind him, he contemplated the idea of turning his passion into a business. Last year, he finally did, with the help of friend and now business partner Sean Matteson. And now, the pair’s fermented foods, sold under the label “Iggy’s,” are so popular, they can hardly keep up with production.

This fall, the nascent business hit a milestone. With the help of crowdfunded interest-free loans, they are about to double their production capacity. And they know it won’t be long before they outgrow their 1,100-square-foot production facility, located at Bainbridge Business Park.

“We are working hard to keep up with demand,” Daga said.

Daga and Matteson have deep ties to the island. Matteson was born and raised on Bainbridge around an entrepreneurial atmosphere. Daga lived there for 25 years and was one of the first farmers to have a booth at the farmers market in the early ’90s. He’s maintained ties to the farming community all along, and said locating his business on the island felt like coming home.

It was Matteson who gave the idea of a business a boost. He and his wife, Heather, were working on a brewing startup when he realized the potential for Daga’s fermented foods.

“Every time I hung out with Iggy and he’d pull out his amazing delicacies, the feedback was incredible. He’s got a real intuition and a green thumb around gardening and foods,” he said.

With Matteson “putting the wind into the sails,” as Daga put it, the business officially took off in February 2012. “I had been thinking about creating a business but I needed an inspiration. Sean and Heather prompted the idea and that was the spark,” he said.

Iggy’s (www.iggysfoods.com) started off slowly, with production and fermentation originally set up in Kingston at the Food Shed. They didn’t have much retail activity at the time. When the Food Shed closed, the partners were able to find a location within a month, moving into their own digs this past March. Their product list has everything from several types of krauts, including the classic sauerkraut and beet kraut, to a habanero hot sauce, dill pickles and kimchee jerky. Iggy’s also recently received state certification to produce kombucha, fermented tea.

They’ve been slowly building up their retail location list, but the Poulsbo Farmers Market — which gave them their start and a testing ground of sorts — seems to be a special spot. Daga said they often have lines of customers, many of whom tell them how their fermented products have improved their health.

“What we’ve tapped into at the Poulsbo Farmers Market is extraordinary,” Daga said. “To think of the potential in this community alone is extraordinary.”

Growing popular

If there were such a thing as a vegetable whisperer, Daga may be at the top of the list. Matteson jokingly said that “Iggy talks to the vegetables.” Asked about his secret, Daga offered this explanation: “There’s an alchemical process. I’m engaged by the mystery of taking a lowly cabbage and transforming it into a valuable, beneficial thing.”

Another thing that Iggy’s has tapped into besides Daga’s fermentation craft is a growing consumer demand for fermented foods. Probiotics — bacteria beneficial to digestion — are a popular supplement on the health market. Fermented foods, which contain the live bacteria that produce lactic acid, are especially considered beneficial not only for digestion but also for the immune system and for general wellbeing.

“We’re catching the wave as people’s awareness is growing exponentially around the benefits of fermented products,” Daga said. “People are catching on to the need to do things that are good for their intestinal digestive system.”

As Iggy’s becomes more exposed to the local market, the number of fans continues to grow. The goal is to stay regional and expand to new retail locations — except they had reached their capacity with their fermenters.

“Part of the challenge of sourcing locally is that we have to plan with the seasons,” Matteson said.

Sourcing funds locally

Daga and Matteson knew they needed more fermenters and a walk-in freezer to grow this season — about $15,000 worth of equipment including a few other pieces like a labeler. They also knew they couldn’t get a bank loan. They brainstormed for four weeks ideas such as crowdsourcing, and that’s when they learned about Community Sourced Capital, a Seattle-based startup that offers a crowdfunding platform.

Unlike most other popular crowd funding platforms like kickstarter.com that are based on donations (which usually come with perks like products for the backers), Community Sourced Capital (www.communitysourcedcapital.com) helps businesses obtain zero-interest loans from their community backers. People can buy “squares” for $50 each, and there’s a limit of five squares per supporter. Businesses, in turn, repay these loans over time based on a percentage of their revenues. Community Sourced Capital charges the businesses flat fees for its services instead of the typical percentage of raised funds.

Since launching its first campaign in January of this year, CSC has had 11 total — all successful — including for Bainbridge Island’s Eleven Winery and for Tacoma-based Harmon Brewing Co. to open a new location in Gig Harbor for its diner, The Hub. The 11 campaigns have raised nearly $150,000 in total with more than 1,000 backers.

“We are a platform that relies on the social capital that the businesses have, so we ask for metrics on social capital and we want to know the level of their community involvement,” said Rachel Maxwell, Community Sourced Capital co-founder and CEO. “We find that the Community Sourced Capital businesses love their community and their community loves them.”

That proved to be the case for Iggy’s, which set its campaign goal for $10,500 to $15,000.

“Everyone knows about them (Iggy’s). Bainbridge Island folk love Bainbridge product. We saw a lot of support for their brand,” said Hilary Wilson, who does product development for CSC and worked with Iggy’s campaign.

The campaign, now concluded, raised $11,650 by mid-October. Matteson and Daga reached out to their networks, making a lot of individual contacts. Of the 115 “squareholders,” about 85 percent were from within 30 miles from Bainbridge.

“This is honest money and it’s a lot about community building,” Matteson said.

Daga said the CSC model was an alternative to traditional financing in a system that he doesn’t feel works well. “Community Sourced Capital provided a way (to raise funds) within the system, but it’s a shift in how people can support each other,” he said.

Future plans

A farmer who was once a full-time sculptor, Daga likes the fact that he has to be out in the community more. “Being an artist had me holed up in my own world and this has really brought me out,” he said.

Despite a sizeable age difference between them — 30-some years — the two find their business relationship creates a synergy. The difference in generational outlooks and backgrounds helps, too. Matteson, for example, had previously run a small events-planning company and has researched other startup ideas while Daga, besides apparently being a fermentation genius, has extensive community connections.

“We really enjoy hanging out with each other,” Matteson said. “Part of the energy between Iggy and me is his mentorship.”

Now that the two are able to double their production capacity by adding 10 more fermenters, they are ready for a major intake of cabbage from Dharma Ridge Farms in Quilcene this fall. The crop they expect to receive will keep them busy for a few months, and then they’ll be ready for spring crops and more.

“The goal is to preserve local bounty and extend it year-round,” Matteson said.

The production of kombucha gives them another market on top. And while the two partners want to grow their business, they say they are not “expansionists.” They want to keep their market regional and develop direct-trade relationships with their farmers. For now, they’re using volunteer help and not paying themselves yet, but Matteson and Daga are excited about the new phase of their business.

“As quickly as things are moving, I’m very optimistic,” Daga said. “We just have to stay diligent with our focus and production.”

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