The coffee futures fund with Akshat Khandelwal

Summary

Podcast Summary: Coffee Knowledge Hub

Episode: The Coffee Futures Fund with Akshat Khandelwal

Host: Andrew Tolley & Tibor Varady
Guest: Akshat Khandelwal, Founder of the Coffee Futures Fund
Date: April 22, 2025

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Overview

This episode delves into the Coffee Futures Fund (CFF)—a new initiative designed to provide holistic support (capital, mentorship, and community) to emerging coffee shop owners. Akshat Khandelwal shares the genesis of the fund, how it operates, who it serves, and the unique model it uses to foster sustainable growth in the specialty coffee sector. Rich discussion centers on the fund’s revenue-sharing repayment model, its mentorship ecosystem, and the potential impacts—both risks and rewards—for participating coffee businesses.

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Key Discussion Points & Insights

1. Origins and Motivation for the Coffee Futures Fund

[00:49–05:38]

• Akshat’s Background: Akshat is not from a traditional coffee background but has been deeply involved as an investor and operator, with a strong passion for coffee since around 2015.

  “I always see myself as a student of coffee… What has been really true to me has been the love for coffee.” – Akshat [00:49]

• The Coffee Owners Roundtable: Akshat founded this community to connect coffee shop owners, facilitate organic conversations, and alleviate the loneliness and challenges unique to running a shop.

  “I saw this job is very lonely… you’re also solving the same kinds of problems in different ways.” – Akshat [03:28]

• Genesis of Coffee Futures Fund: The fund emerged from Akshat’s realization that knowledge-sharing and mentorship had a powerful impact on business sustainability, not just financial capital.

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2. Structure and Purpose of the Coffee Futures Fund

[06:12–07:55]

• Not Just a Fund, But an Ecosystem:

  • CFF provides three pillars: investment capital (up to $50,000), a mentor board (>100 years combined industry experience), and a supportive peer community.
  • The mentorship board is central—money is not the only engine for growth.

  “The core engine actually is not just the money, it’s the mentorship… There's no one right answer.” – Akshat [06:43]

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3. The CFF Program: How it Works

[07:55–12:24]

• Cohort Application & Selection:

  • Starts with applications (focus on the US for the first cohort).
  • Ten shop owners are selected for a 10-week intensive program (modules on branding, operations, leadership, etc.).
  • Two "winners" are chosen for the investment; all ten gain access to a yearlong mentorship program with no cost to participate.
  • Recipients repay by sharing 5% of gross revenue for four years (only if they receive the grant).

• Inclusivity: All participants retain access to mentors and resources, not just the two who receive funds.

  “Even the rest… they all have access to the mentorship, the year-long program. There is no cost.” – Akshat [11:00]

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4. The Revenue Share Model: Risks & Rewards

[12:24–20:42]

• Tough Debate about 5% Gross Revenue Repayment: Tibor and Andrew challenge Akshat on the potentially high cost, especially given industry’s narrow margins.

  “If they commit themselves to paying 5% of revenue, that could eat up one third of the profit, all the profit. It could be a loss driver.” – Tibor [12:50]

  • Akshat emphasizes value: the program is not a pure cost but an investment yielding increased revenue and/or cost savings thanks to mentor input and business improvements.
  • There is no obligation to accept the investment if selected; businesses can opt to participate in the mentorship only.

  “We believe… this is what will propel you to do much better than what you’re doing today… It’s not electricity that you’re paying.” – Akshat [13:27]
  “If we bring the best of the mentors… you’re also finding ways to substantially save costs.” – Akshat [17:44]

• Realistic Returns: Andrew and Tibor suggest that for many shops, especially those with low margins, the real benefit hinges on leveraging the mentorship to drive significant growth.

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5. Selection Criteria for CFF Investment

[20:42–24:46]

• Core Pillars for Choosing Recipients:

  • Clarity and authenticity about the business and its customer base.
  • A genuine sense of purpose and “why.”
  • Founder grit and perseverance.
  • Coachability: willingness to act on mentor advice.

  “Do you have clarity… Can you with clarity speak to your business, to your audience? …Are you here for the long game and are you coachable?” – Akshat [22:49]

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6. The Mentorship Component

[43:13–46:52]

• One Year Structured, Flexible Mentorship:

  • Group and/or one-on-one sessions; access to multiple mentors, not just one.
  • Monthly meetings, plus ad hoc as needed.
  • CFF builds templates and playbooks from these sessions for ongoing group benefit.

  “Imagine monthly meetings… You can go as deep or stay at as high level as you want… You don’t have access to only one mentor.” – Akshat [43:33]

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7. Industry Parallels & Inspiration

[41:20–43:13]

• Inspired by:
  • Echoing Green’s recoverable grants for social ventures.
  • Y Combinator’s accelerator model (cohort, community, mentoring+capital).
  • Emphasis on custom tailoring models for the coffee industry, not copy-pasting VC or bank debt norms.

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8. Honest Reflections and Cautions

[35:02–53:32]

• Tibor’s and Andrew’s Skepticism:

  • The 5% revenue share is potentially “make or break.”

    “5% does make or break the bank… It could translate to 100% of profitability in a bad year.” – Tibor [33:38]

  • Both warn potential applicants to go in with “open eyes,” leveraging the mentorship, and carefully considering the full contractual implications of taking the investment.
  • Andrew notes there’s a risk for CFF—shops may take the mentorship, learn and develop projects, but seek capital elsewhere at lower cost.

    “That's the risk for you… The cost of capital to them is so great that they’ll be incentivized to look elsewhere for the capital, but to take the knowledge and everything that you invest in them.” – Andrew [49:48]

• Akshat’s Optimism:

  • Sees any mentorship or industry upskilling as additive, even if CFF doesn’t fund the business.
  • Committed to “taking one step at a time” and iterative improvement with each cohort.

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Notable Quotes

• On the Industry Problem:

  “Four out of ten coffee shops survive beyond five years… I want to flip the script and say eight out of ten.” – Akshat [29:42]

• On the CFF Value Proposition:

  “Think of Coffee Futures Fund as a value-aligned partner who’s here hand-holding you with more than hundreds of years of experience and meaningful capital to take you to the next level and… live your dream.” – Akshat [47:57]

• On Clarity of Cost vs. Investment:

  “If I don’t believe as an owner to begin with that my business is here and with the CFF support, my business can grow here, then no, I’m just looking at it from a cost perspective. But if I’m seeing that yes, I can actually grow here, then… that share of my business is not really pure cost. It’s an investment.” – Akshat [36:51]

• On the Value of Mentorship:

  “I see the impact of knowledge sharing. I see the impact that mentorship guidance can really bring to an emerging coffee shop to start on the right foot.” – Akshat [05:15]

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Timestamps for Key Segments

• 00:49 – Akshat’s background and journey from investing to coffee
• 03:28 – Creation of Coffee Owners Roundtable and industry learning
• 06:12 – The CFF “ecosystem” explained
• 07:55 – Step-by-step breakdown of CFF’s selective program
• 12:24 – Detailed debate over the 5% revenue-sharing model
• 20:42 – Criteria for selecting fund recipients
• 29:42 – Broader industry perspective; aiming to improve cafe survival odds
• 43:13 – Structure and experience of the mentorship program
• 49:48 – Reflections on risks, alignment, and long-term value

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Tone and Language

The tone throughout the episode is frank, inquisitive, collaborative, and occasionally playful (especially in tough debates about the fund’s structure). Both hosts press for transparency about financial risk while respecting Akshat’s sincerity and vision for positive industry change.

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Conclusion

This episode provides a robust, sometimes critical, but ultimately encouraging look at new funding and mentorship models for specialty cafe owners. With actionable insights, industry anecdotes, and candid debate, it’s a must-listen for anyone interested in coffee entrepreneurship, alternative financing, and business growth through community and mentorship.

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Transcript

[A]

Hello and welcome to the Coffee Knowledge Hub podcast. I'm Andrew Tolley. I'm here with my co host, Tibor Varady. Hello, Tibor.

[B]

Hello.

[A]

And today we're talking to Akshat Khandharwal from the Coffee Futures Fund. So hello Akshat, how are you today?

[C]

Thanks, Andy. I'm doing great. I'm honestly honored to be here. I have been speaking with you since a while. I've been following you for a longer time, so it's an honor to be here. And Tibor, well, I visited a coffee shop in Budapest, so, so, you know, I've had your coffee and I've enjoyed your experience, your hospitality. So excited to be here. Yeah, thanks.

[A]

Well, thank you very much for coming. And we're excited to learn about the Coffee Futures Fund, which is a new, relatively new sort of idea or concept in financing for cafes. So can you tell us a little bit about what the Coffee Futures Fund is and how you got involved?

[C]

Yeah, it's a very interesting story and in fact, it's been a journey. That's how it start. Coffee Futures Fund has not been, okay, here's the startup idea. Let's, you know, let's do something radical in the industry. That's, that's never been the intention or that's not the genesis, so to speak. Speaking of genesis of coffee, we respond. The way it started was, you know, think of, I think of me as not coming from a traditional coffee background. Right. So, and that's very interesting because I always see myself as a student of coffee. I come from an investing and operator background, have spent a lot of time working with global brands, with founders, with entrepreneurs, helping them grow their businesses. I've seen, I've raised capital, I've been a founder. And so that's the experience I've come. But one thing that's been really true to me has been the love for coffee. Just as a consumer to begin with, I just used to enjoy and you know, when you're working in investing world or just operating world small businesses, there's no concept of office hours. Right. So. So you drink a lot of coffee. I used to drink a lot of coffee. And, and one fine day used to.

[B]

You used to drink a lot of coffee.

[C]

I think I'm becoming better at moderating my life and my coffee consumption now, but at that point without the knowledge, so to speak. And that's what excited me, Andy, you know, so, so I got intrigued by this beverage, started learning about it, starting reading books about it. This is, I don't know, 2015 almost a decade back and I read documentaries, I reached out to people that, hey, what are you doing with coffee, what are you up to, etc. Etc. And got into this, you know, romantic side of the coffee world, which is what is interesting in my journey. Because during that time I was also planning to come to the US to do my MBA in entrepreneurship. So again, the whole idea was to start my own something and for me that was coffee. Because coffee I was in the previous few years, I was just engrossed with coffee, learning about coffee, talking to people. So I had this romantic dream, you know, of starting my own coffee shop. And when I came to the us, the first six months, that is the defining moment. And in many ways the genesis of Coffee Feud is fund because I went around visiting local coffee shops, talking to owners, managers. So how do you do it? I have zero experience in coffee, so where do I start? What do I do? And Tibor and Andy, when mature, and I think you would agree with this, when majority of the people tell you, son, don't even think about it, I'm like, hey, what are you saying? You were doing it for so many years now, why are you telling me no? And of course they were kind with their time and they shared it's not a fun business. It's a lot of hard work, it's not as fancy as it seems from outside and there's no money and you know, no pun intended, but it's like a lot of grind. So. And that took me back for a bit and I'm like, okay. When I'm hearing this from so many people, I think there's some reality to it. And then I, during that time I put the idea of becoming a coffee shop owner on the back burner and I got really motivated to start this community of called Coffee Owners Roundtable where I used to bring five to 10 coffee shop owners together in a room once a month to just have organic conversations, you know, just peer to peer. Because I saw this job is very lonely, this seat of a coffee shop owner is very lonely. Right? So. And you're also sort of solving the same kinds of problems, solving the same kinds of questions in different ways in your own unique settings. But there is some commonality in the kinds of spaces or issues you're trying to solve. So I'm like, okay, let's bring the group together, have or support organic conversations, get to know each other and create this sense of knowledge sharing and safe space. It's been five years now, Andy and Tibor and I'll wrap Up my long story, but essentially it's been five years now. Having seen Coffee Owners Roundtable in, not just in Boston, not just in the U.S. but even in Europe. I've done it for so many years with so many coffee owners around the globe. I see the impact of knowledge sharing. I see the impact that mentorship guidance can really bring to an emerging coffee shop to start on the right foot, to grow sustainably and not just, you know, struggle out and out. That is where Coffee Futures Fund comes in. Right.

[B]

So.

[C]

So I'm bringing my passion for coffee as a student of coffee and my experience of working with global brands, supporting and scaling them can grow sustainably. So, and I think that's. That's what the coffee industry needs. Ecosystem. It's not just money. You're not coming here with the money. And then, hey, here's your answer. That's not the answer. So Coffee Feeders Fund is providing holistic answers, so to speak, to the specialty coffee, especially emerging coffee shop owners.

[B]

So let's maybe jump into what the Coffee Futures Fund is. If I see correctly, it's a new thing, like it's just about to start actually operating. So it'd be very interesting to understand what the concept is. And also if you can, like, what does it mean that it's a fund? Like, is this a business? Is it a. What's the format here?

[C]

Yeah, that's a good question. And I get this question a lot. So, you know, it is. When you say it's a fund, you essentially are saying that you are an entity which is providing capital. That's your sort of engine for growth, Right. Or for operating in the simplest of the words. That's a fun. And you're expecting returns here. Coffee Bearers Fund. Yes, it is a fund in terms of it's providing investment capital to emerging coffee shop owners. But, you know, the best way to see Coffee with fund is as an ecosystem because you're not just providing capital, you're not just providing mentorship, you're not just providing the community, you're providing all three. So it's an ecosystem that we are providing, where the core engine actually is not just the money, it's the mentorship, because we have a mentor board of industry veterans of coffee shop owners who have been there, who have done that and who have combined experience of more than 100 years. And I think that's the beauty of it, right? Because there's no one answer, and I hope you would agree. There's no one right answer. Right. So when you install this mentor board who have such wide experience around the capital that the fund can provide and the community that the fund will create of exclusive coffee shop owners. Now that's what Coffee Mutus fund is.

[B]

So just to recap the format, indeed you have these amazing mentors, some of which are actually old friends of ours and I'm not going to pick any names just to not get into all this, you may list some of them. So there is a, you choose coffee shops that apply to you, right. Then there is an intensive training, there is year long mentorship and there is an up to $50,000 I guess grant or I don't know what the right word for this is, money given to these shops and then there is revenue based return on the other side. Is this a correct description of the program?

[C]

Yes, yes, yes. Because I think you know, one of the values that I 100% live with is do less but do better. Right. So that's what we're trying to do here with the fund. So exactly what you said, you're spot on. We take in applications, we're starting with the US Our first cohort is going to be small, it's going to be selective. We start with the US we take in applications, we select 10 coffee shop owners that we believe are. So it's a two way street, remember. So we want to make sure that these are the right folks who can actually are on the right track, so to speak and can also benefit from the impact that we are hoping to create. So it's a two way street because we want to see that we can confidently with the mentor board can create impact in these coffee shop businesses. So back to your question. It starts with the application. It starts with a 10 week program where we have 10 coffee shop owners week by week. There are key modules, foundational modules like branding, storytelling, your operations, your leadership, how to cultivate a team. So you go to the 10 week program, it's slightly intensive in that sense because you have access to the top mentors and we have guest speakers who are again some of the top, top brands in the. And then once you complete that 10 week program there are two winners who we essentially invest up to $50,000 of capital and then that's again that's not the story because it's not just a 10 week program. You also provide them year long mentorship, the cff. So the coffee shop owners, the entire cohort has access to the mentors and not just access that, hey, can I reach out? May I reach out? No, you have literal access and you can Come back in, use the resources, use the mentor's time and knowledge to go back and apply in your business.

[B]

And just to, just to clarify, so there's a first group who go to the intensive program and then there's two selected for the grant and the other ones, they stay in the program or for them this was. That's it. Or, or what happens to the. Do they pay anything or do have like the, the ones that haven't gotten the grant, they did get the intensive training. What happens to, to them?

[C]

Yeah, so the one. There's no, there's absolutely no cost to apply to the Coffee Futures Fund as and there is absolutely no cost to stay with the Coffee Futures fund. All the 10 shops, there are two winners who earn the investment capital. But even the rest, the rest of the eight, they all have access to the mentorship. The year long program. Right. It's again, it's not a program per se because this is an year long space where they can come back. We will create structured spaces with, with exclusive access to the mentors. Right. So there is no cost. All the 10 coffee shops in the first cohort stay throughout the year.

[B]

And then just to understand the other side, who pays like on the other side, you expect the coffee shops to pay 5% of their revenue for four years. Is that all the shops or only the ones that have gotten the grants?

[C]

Only the ones that have gotten the grants, yes, absolutely.

[B]

So the other ones are just completely free. For free.

[A]

Yeah.

[C]

And that's the beauty of it, right? What's the cost? I mean there's all upside. And that is how this is by design. This is not just writing equation on paper, paper and then coming up. Okay, this, this could be the right answer, but this is by design that we want to make sure there's all upside. What's to lose? Even if you don't earn the capital because you're not in the top two of the top 10, you still have access to the mentors.

[B]

I'll answer. Okay, I'll ask you what's to lose. Let me. Okay, let's go, let's go. I. I think the, if you could reflect on this. I think there is something to lose or, or it is does seem a bit potentially risky. A lot of coffee shops operate on a 10% 15% bottom line.

[A]

Right.

[B]

If they're doing well, it could be less. Now if, if they commit themselves to paying 5% of revenue, that could eat up as the profit, one third of the profit, all the profit. Even more than all the profit it could Be a loss driver. If they're like making 4%, then they have everything to lose. So I'm just, I, I'm just wondering, isn't that 5%? Couldn't that like, it seems potentially a lot to pay back actually, if you're actually receiving a grant, what's your response to that?

[C]

Yeah, no, it's, it's a good question and this is not the first time I've heard that question or pushback. So I appreciate that and I absolutely agree with you that it's, it's, it's meaningful. It's meaningful some. And, but here's what I tell you why I believe in this right? One, it's not ideal to just look at it from a cost perspective that, hey, here's my business. This is what I'm doing right now. Simply speaking, let's say I only have 5%. I'm only making 5% profit in my, in my business today. And if I just say that, hey, tomorrow, if I work with Coffee Futures Fund or if I, you know, be a part of Coffee Futures Fund, I will give up this 5%. So I have zero. Right. That's not the right equation or the lens to look at because you have something that you did not have before, which is the investment capital, the mentorship, the community. And we believe, I strongly believe that this is what will propel you to do much better than what you're doing today. So it's changing the status quo. You're not staying exactly at the same level. And it's a cost that you're paying. It's not electricity that you're paying. Whatever happens to your business, customers come in or don't you still pay that value? No, it's providing you the resources, the entire ecosystem, so that propels you to grow your business sustainably. And.

[B]

But isn't it too much like it's like half the profits. It's like half of everything is 50% shares. $50,000. Like, I, that's. I just, it feels like if you take 5% of revenue of a, of a 10% profitable business, that's 50% shares for four years. Isn't that.

[A]

How do you.

[B]

Like I, I was just wondering how. What the conversations inside or if I'm missing something. It, it feels brutal.

[C]

Tell me, tell me more about that because I, I'm trying to understand how that, how do you equate that to 50% of the business or 50% if I'm.

[B]

Maybe Andrew can help me out. But. So I actually have a coffee shop, right. And there's been difficult years. There's been Covid. Economic chaos. By the way, economic chaos seems to be a good bet for the future. Right. So yeah, we've been making a 9%, 8%, whatever, 10%, 6% bottom line in many of the past years, like so off, off of the revenue is what I've made. If I have to give up 5% of that in exchange for consultancy, that's half of everything that I've made. So that's of course maybe consultancy can lift it obviously. And I clearly that's the idea and I don't doubt it can. I'm just, I just think that even if it successfully lifts it, it. It's a super large amount of money potentially. So that's why I was curious of the thoughts behind this particular structure.

[C]

Yep. Let me, again, let me, let me take a different angle because I think it's not fair to look at it as a cost perspective. Right. Think about, tell me Tibur, what's your typical spend as a percentage of revenue on people?

[B]

About 40.

[C]

About 40%. And what about marketing or just pure operations marketing?

[B]

I guess you could call that 0ish. And operations, I don't know. 30% food cost is about 15% other costs or overheads or operational costs.

[C]

Yeah. So here's the thing, right? So you're spending around 60 to 70% on your operations food cost and your

[B]

people as a percentage of like 70, 70 more and more. Yeah.

[C]

Right. 70% as percentage of revenue on your people and your operation slash food cost. Now what would you say that you had access to the best of the mentors and the ecosystem to do better, which can reduce this cost? Because would you say that there are opportunities to save cost, do things better in your business?

[B]

Absolutely.

[C]

So that is the value. Right. So it's both ways. Could you save costs by bringing in better consultants or better experience? I mean again, think about it this way. The ideal customer or the audience for Coffee Fetus Fund is not Tibor, because you have decades of experience and you have actually built and grown the brand, which is Espresso Embassy today, which a young entrepreneur or coffee shop owner cannot build. Right. Because you have gone through the cycles of learning and growing and learning and growing. So you are much far ahead. And so if CFF tells you that, claims that hey Tibor, we can help you and you know, make it next better, that would not be a fair claim. Right. We want to bring value where we can see the maximum impact and that is not with Espresso Embassy or with Tibor. Because you already have decades of experience, but with someone who's in the one to three years of their coffee shop journey, they are still going through the learning phase. The cost of making mistakes are still too high. Right. So if we bring the best of the mentors, not just one mentor, remember, it's. It's a group of mentors and the community and the resources together. You're not just helping them improve their business by growing, hopefully the revenue, but you're also finding ways to substantially save costs where you're spending close to 50 to 70% on your people and your operations. There is a sign, I mean, if I were to take a bet, I would say I would cff in this cohort of one to three year coffee shop journeys, we can easily save a lot of cost. Right. And I'm not even going to increasing the revenue and ways we could do that, but that's the total business impact. It's not just one way of money going out, but it's money saved and money retained or grown. How do you feel about that?

[B]

I certainly believe there's a chance and I've had great experience with consultancy and I've paid for consultancy and I think there's incredible knowledge to be had and almost immediate wins with the right expertise. I am a bit wary about 45% revenue for four years, to be honest. Again, amazing, amazing knowledge and an amazing group you've put together.

[A]

So, yeah, these are really good lines of questioning though, because it's obviously the question that everyone's going to be asking. So it's good to be very direct and get this out in the open. And I'm also curious because 10 cafes come into the cohort and then presumably there's a selection criteria for those top two that go through. What kind of things are you going to be expecting from the two cafes who then qualify for the investment? What would make investing $50,000 in each of those a worthwhile investment?

[C]

Yeah, that's amazing question. And this is very timely because our applications are live right now for the first cohort. They went live on April 1 and they will be live for the next six weeks, until the middle of May. So this is a very timely question as the coffee shops, emerging coffee shops especially, are thinking about applying to the Coffee Futures Fund. In terms of the selection criteria, we have spent a lot of time, I mean, the entire board, we meet once a month. It's been five board meetings already and we have spent a lot of time thinking, what are the key pillars that we want to see? I think the pillars remain the same. I hope you would agree. Please let me know if otherwise is essentially the clarity of the business. It's not just we are not looking for right answers or the best answers. Right. What we are looking for is authenticity. The clarity that you have of your business today, of your customers today. It could be half baked, it could be, you know, possibly a consultant would have a better answer for your coffee shop. But that's okay. You're not worried about that, right? Do you have clarity? Can you, with clarity, speak to your business, to your audience, to your customers, your neighborhood? That's one your. Why. Why are you really doing it? Because I think that's, that's the defining moment, right, that I have seen over the years. I've seen so many coffee shop owners come in with the whole idea of, hey, you know what? There's, there's money in this specialty. Coffee is growing. Coffee is growing. Let me put some money, let me open some couple of shops and then go from there. Sure, you can do that. Of course, that's not the passion or the why that we're looking for, right? We are looking for people who are really passionate about the love of coffee and the love of sharing it with their neighborhood, with their community. Because that is a, a defining indicator of long term success. Because tomorrow, if you're just coming from money perspective, you may find another opportunity that's even more lucrative and you would shut your shop and go to the other opportunity, right? So back to your question. The why being an important part. The third piece is the owner grit. And passion is not the right, but the owner grit, right? Because ultimately you should have that hunger that you want to, you know, stay in this. It's a long term game. Coffee shop is not just, you know, a one year wonder. You have to stay at it and do things again and again and again. There is a lot of learning. This, the business really humbles you in so many ways. So you have to have that grit and perseverance to just stay and continue to go through the process. So if I were to summarize this clarity of your business, your audience, you really know what you're serving them. There is clarity and there is a purpose behind what you are doing and why you're doing it. It has to be a very clear purpose and mission. The third piece is the founder grit, the owner grit and perseverance. Are you ready for the long haul? Are you here for the long game and are you coachable? Because, you know, interestingly and Tibor and Andy, I'd Love to know your thoughts, but interestingly, the biggest, you know, pain point for a consultant is we give so much value, but our clients don't really act on it. Right. So, and that that's true across the board, across industries and therefore we are looking for coachability. Are you here to learn and be able to apply what you're learning from the mentors? Because our mentors, I mean, it's a huge deal for me for Coffee Futures Fun that these mentors are on the board. They are open to share their time and knowledge and experience. If I, if we have the cohort where the coffee shop owners are ultimately not applying that knowledge or not even trying to apply that knowledge in the right sense, that would not be justice to any of us, right to the coffee shop owner and to the mentors. So we want to see the coachability, how coachable are you to actually go through the process and apply.

[B]

I think that's super interesting. I think I've said that before on this podcast. My personal perspective is that indeed there's some like low hanging fruits for in coaching, there's probably some medium, right. And then there comes a point which I, where maybe I find myself, but I'm sure others as well, where you kind of know that there's these many things that you could do to improve and maybe you struggle in what to do next. Of course, I guess that can also be coached, but that can be a challenge. I find a parallel with fitness. Many of us know what food we should eat or how we should work out or how we should rest, how we should sleep, what we should not consume. Yet not everybody is great at it like Andrew Tolle is. So it's similar with the coffee shop. Like you may know, you know you should check your inventory and check your cost of goods and that you're, you know, what the percentage of that should be, how you should organize labor, how you should do social media, how you should treat your staff, what kind of one on one meetings and bigger meetings you should have, how to improve your tasting skills, cleanliness. Like there's this endless list of things of how to improve your shop. Indeed, sometimes I think the challenge is more like choosing on what you actually do or to have the strength in yourself to not succumb to staying where you are and to always be ready to change. And yeah, I think that's where some mentorship or almost like coaching comes into play to like help you move the right levers. Because at some point the knowledge is there. I think a lot of knowledge can be, can Be pulled in from many places these days. But it doesn't mean that you're actually using that knowledge.

[A]

Yeah, good points. And just, just for the record, I run because it's cheaper than counseling. It's a, it's a form of emotional counseling. I am looking at this in very much a kind of investment return on investment, I guess more traditional, more traditional view on that. And I'm thinking, right, well, you have $50,000 in order to increase your revenue. But with any investment, if you take in a loan or you take in equity as an investment, because there's two kinds of financing, right? There's either debt or debt or equity, or what you're doing here is, is a form of revenue sharing. But the, the point is that, you know, if we just look at numbers, then as a. I think t. Boy, you showed me some numbers before. An average coffee shop in the US is turning over a bit over $500,000 a year. And so if you take, say you take, you know, the 50,000 and, and it's, it's 5% for four years, the cost of that investment is 25,000 per year. So the payback for your investment actually out of 50, 50K is two years. Yeah. So what, what if you're taking investment in a business, whether it's debt or equity or any, any kind of funding, then there should be a return on that investment. Right. So I always say if you spend 100,000 of your own capital on a cafe, you need to have a time horizon to get a return on that investment. And that return, you set your own return. So you might want 10% or 15% or 20%. So you know that by the end of the time horizon you set that, you will get 15, 15% back on that, that 100K. So I think that's, that's the way I would think about the investment of capital. Here is how, what's, what's the potential return on investment? So if you're taking 50k as, as a fund, what are you going, what kind of projects are going to be valuable and will generate the kind of return that you need? So that's, that's the way I would be looking at it. What kind of projects are going to increase my revenue in order to give me a 10% return? Because the 10% return is pretty good on, on as an investment.

[C]

Yeah. So your question being what kind of project CFF is looking at? Is that your primary question?

[A]

Yeah, but I think it's also just that, just maybe also just thinking about, because I think One of the problems you're trying to solve with CFF is that a lot of cafe operators get into the business because they're passionate about coffee and they want to, you know, talk to their friends and make coffee and, you know, change their lifestyle from whatever they were doing previously. A lot of people don't go into it to make money and then they realize that actually they do need to make money to, to justify the many hours they're working and the, you know, higher levels of stress and the, you know, try and get some return on the investment that they initially made. So, so what we're trying to do is help people to get that return on and get that return on investment. And giving people, you know, 50K is, is the seed funding that will help them to, to get a return.

[C]

Well, you know, I like the framing that you have here, but essentially the point is two things. One, we don't live in a world of averages, right? So it's difficult to take averages on paper or take the trend for the last 20 years and say that, hey, this is how we'll apply, and this is how we'll apply the fund. This is how we'll find the right project and this is the kind of return that we should expect. That is not the approach that CFF is taking. We are not following an averages approach. We are being really careful in terms of taking smaller steps, but clear steps that align with our vision, which is to flip the script. In simple words, my vision, if you'd ask me, is to flip the script right now. Four out of ten coffee shops survive beyond five years. Roughly speaking, again, going by the numbers or the historical trend, whatever, it's broken data, etc. But 4 out of 10 coffee shops survive after 5 years. I want to flip the script and say 8 out of 10 coffee shops survive after five years. How do we do that? We do that by uplifting the ecosystem, by uplifting the industry. And the way CFF is doing is taking a small portion of that industry and providing them access to the right resources, the right ecosystem. Unlike typical funding, venture capital or debt based funding, we are not taking both approaches. We are not taking, we are not giving you debt so that it's, it's a sort of a death sentence on your pnl, right? When you think about it, whatever happens to your business, economic slowdown or not, you have to pay that money back, right? We are not taking that approach. We are, we are flexible. We are also not taking an approach of a venture capital typical fund where we pump in a lot of money. But we see you as a, as just a number on a piece of paper. Right. You're not a real, I mean of course you're a real business, but we see you as a number. We take equity so we own a part of your business. And our whole intention is to within 5 years or an 8 year cycle we want to 10x or even FX our returns. These models, both typical venture capital and typical banking debt based model don't work in coffee shop businesses. Like you said, people do it out of passion. And you know when, when you really think about it, that is not a coffee shop business model. Honestly, it's not a coffee shop business to grow fix. Sure there are some exceptional cases which is great for the industry but that's not the larger reality or the majority. Right. So both these models don't work. What we are doing is we are providing the resources to and being a partner in the upside. Simply we want to be a partner in your upside because that is where we see the potential. It's not the 5%. We are not thinking small in terms of okay, 5%. So how do we turn that around and get the money back? It's a long game. So I am hoping that in the, in the four years that we stay with, with the coffee shop who started, who were in the initial phases of their journey and stay with them for four years we expect hopefully 30 to 50% growth in their business and that's also organic and sustainable growth. I am not here to. The CFF Coffee Peters Fund is not here to pump the money in and pump the money out. That's, that's not the model that we are following. And given the scale of capital that we are investing, I think we, we can be absolutely safe that this will not break or make anyone's bank. Right? Not the fund, not the mentors, not the coffee shop owners. Right. But it's meaningful. At the same time, the whole package is meaningful. So let's, let's think about one step at a time. Let's think about what we are confident about, the meaningful capital, the meaningful mentorship and let's just focus on that and create impact.

[B]

I'm sorry but 5% does make or break the bank. It obliterates the bank or it makes it worthwhile if you make it again it's like basically half of all the money that a shop makes or a third that makes or breaks the bank. So I think, I just feel that there, like what is like is there any safety net or is there any complexity to this 5% thing, the revenue sharing. Is there, is there a way to exit? Is there, is there an upper limit if it's successful? Like is there is an upper limit of like how much you pay back? It is. I feel it's a bit understated on the website. It's like, oh, you've won the jackpot because this is such an easy way. It's just 5% of the revenue. So if your revenue is low, it's just 5%. If it's high, it's 5%. But 5% translates to 50% or 30 or 40 or percent of profitability. It could translate to 100% of profitability in a bad year. So that's why I'm saying it does make or break the bank. That, that's why I feel maybe, I wonder if it's, if it's something that actually hurt some cafes who participate. It's a lot.

[C]

Yeah. I mean, again, I'm not disagreeing. I'm not saying it's not meaningful. The point is this, right? So it would be a one sided view to say that hey, it's a big cost on the business and therefore it's not ideal. But it's always good to see the complete picture which is the positive, the upside, right? What am I really getting? If, if I were a coffee shop owner who was considering to apply to Coffee Features Fund, what am I seeing? Am I seeing this as a cost that it's just like electricity, I am running my business, I will now have to pay 5% or 1/3 of my profit to this Coffee Features Fund and that's it. So no, that's a huge cost for me, for my business. Let me not do this. But that would not be the right approach, right? That's where I would argue with a coffee shop owner and say that hey, you are here today. Do you honestly believe that with the entire ecosystem that Coffee Futures Fund is providing, which is immediate initial capital plus immediate mentorship access plus immediate community of exclusive owners, if you provide this, if I had this as a coffee shop owner and my business is here, do I really believe my business can grow here? If I believe, then why not participate in the 10 week program? And so what's the cost? Because I can always say no. If, if I'm the first of the top 10, if I'm the first eligible candidate, that CFF feels that hey, we want to invest in your business. I can always say no, that hey, you know what? I don't think I need the money. Let me take a step back. I'm still part of the cohort, I'm still part of the program, I'm still part of the mentorship access. I can still enjoy that.

[B]

Yeah, that does sound amazing. That's version without the money. It's very clear. Just. That's just a win, clearly.

[C]

Yeah, but that's not the whole point. Right, Deborah? So here's where I'm taking a step back from what you're saying. Because if I don't believe as an owner to begin with that my business is here and with the CFF support, my business can grow here, then no, I'm just looking at it from a cost perspective. But if I'm seeing that yes, I can actually grow here, then yeah, then 5% of my revenue or that share of my business is not really pure cost. It's an investment. Right. It's not electricity, it's. That's cost. This is investment. When you, when you invest in a consultant, yes, you think about the cost, but you're not considering it purely from a cost perspective. Consultants are expensive. So you're not only thinking from hey, how much will the money go out? But I'm looking at the bigger picture. Yes, this person can really solve my problem and see, help me see wins that I'm not seeing or save me cost when I'm not seeing. So yes, investment in the consultant's time is valuable for me. So let me do that. That's where I urge for coffee shop owners to consider that lens when they are applying to coffee Futures fund.

[A]

Yeah, if the, if the investment is taken and you don't see an increase in revenue, then clearly that's, I mean, no investment is risk free on either, on either side. So, so if you're, if you're taking in this money and you don't generate at least 5% increase in revenue, then it's not really a win. And I guess, well, 5% increase in

[B]

revenue will not cut it. You need probably about. Wait a second, how much, how much? Because you need to give up 5 clean. So your increase in revenue has to be about, about 40% and then you're able to pay back.

[A]

Yeah, 40% some.

[B]

I don't know, it has to be a lot to kind of break even from the coffee shop's perspective.

[A]

And, and, and you can, you can take up to 50k in investment for the top two. What if they take 25? Is it still 5%?

[C]

That'll be a little flexible and we are not defining that. Hey, you know what, here's K. How about you just take 5k or how about I just take 15k? That won't be helpful for anyone. So I think the two levers that we are having right now is 30K and 50K. But that's also, I think it's good to provide some flexibility. But total flexibility will not solve anyone's case here. Not the fund and not definitely not the owner. Right. Because the owner would say that, hey, what would the 5K do to me? Or 15K? But okay, I take the 15K, but now I have to pay 5% of my revenue. What's the point? There's no point to it. That's, I mean the cost and the benefit are hugely asymmetrical now. So therefore it's slightly flexible. Let's say the 30 and the 50K levers. But, and, and proportionately your revenue share will also change. Yes to that. Right. But it's not completely flexible. That, hey, I can take, I can. As a coffee shop owner, I can pick any number between 0 to 50k.

[B]

Yeah, yeah. And I guess it also has to. Indeed. And I'm sure that's where the consultants and your experience comes in to find indeed things that will, that will give a sure return to investment. Right. And then whatever that money is going on.

[A]

Yeah, yeah. I think we can, I guess we can also look at it from your perspective. It's your capital and you're trying to minimize your downside. Right. So you're not going to put 50k of your capital into a business that you don't see growing because then there's risk that you won't get the capital back and certainly won't make a return on that investment as well.

[C]

Yeah. I mean, it's like, you know, as an entrepreneur, whenever you are investing in yourself, right. You're investing in the venture, you're thinking about the upside. And again, upside, not primarily from, okay, if I invest X, will I get X +2 in five years? You're thinking about the long term. You're thinking about, okay, do I really believe in this? Is this really solving a problem? Right. That's, that's Entrepreneurship 101. Are you really creating a product or are you providing something that will really solve the problem if it's really not solving the problem? Was the, I mean, even if you get money out of it, sure, but what's the point? Right? And that's, that's where I'm coming from. That's the lens I am taking. It's not purely math driven equation for computers.

[A]

Where else have you seen, where else have you seen this model in any parallel industries.

[C]

Oh yeah, there are, there are different models in different industries you can think of. There is this organization called Echoing Green who provides recoverable grants to socially driven models. So huge organization. They have a rigorous process to select the right candidates. It's a global organization where you find and pick the best socially driven organizations who, who are motivated to do something along the. What do you say? UN sdg, sustainably development goals by United Nations. So if you follow along those lines, yes, Echoing Green provides recoverable grants. That's one model where we have sort of learned from there is Y Combinator which is the biggest accelerator in the startup ecosystem, the technology startup ecosystem. And what they did 20 years back was also radical because before them they were typical investors who would put in the money and take ownership and expect returns. Y Combinator created this space where you are part of a cohort. It's more of a community driven model where you bring in mentors, where you bring in the experts and where you of course provide the capital again, meaningful capital to early stage businesses and help them grow. You are a partner in their growth. It's not just money in, money out. So there are several models like this that we have learned from. But ultimately I think what's true is it has to be custom designed for coffee shop businesses. You can learn and take inspirations from so many different models. You have to make it custom designed for coffee shop businesses and that's what Coffee Futures Fund is doing. You're learning from the best. There's, there's amount of experience and in the industry otherwise across industries. So let's take inspiration and custom design again for coffee shop businesses.

[B]

Do you, do you have any idea how, how intensive or how, how can one imagine the, the mentorship that's lasting for four years? Like what can one expect? You know, is it going to be like crunching numbers every week or is it more like a conversation every week? Like is, is there a way to, to see what this is going to actually look like?

[C]

Oh yeah, yeah, absolutely. So I love that question. So one, one note that it, it won't be the mentorship won't. It'll be for the first year. Yeah. So of course we want to make sure mentors time is respected and valued and all of that and the realities of the situation. What if the mentors moves on two years later? Right. Different things happen in the, in the world. So one year is where you have access to the mentors. You still are part of the community. You have access to all the resources during this One year, it won't be. It's not as intensive. You're not meeting weekly, you're not, you know, asked to do something here. You have access to the mentors. So we will create space. Imagine monthly meetings, right? This could be in a group setting or as a one on one with the mentors, where you have access to the mentors. You can go to them, share what you're working on, what challenges you're facing, what's keeping you up at night, and discuss or gain feedback and continue to do that for a few more months. You can decide. Again, it's flexible in terms that if it's a pressing problem that you want to get a resolution for, you can work with your mentor to, to have a rhythm to your discussions, to your meetings. You can go as deep or stay at as high level as you want, right? That's the flexibility we provide. The second piece is, and that's the beauty, I believe, having the mentor board. You don't have access to only one mentor, right? So, for example, this is this phase. Right now I'm struggling with pricing my coffee or pricing my menu. Maybe Tibor is the best person to speak with. So for the first three months, let me work with Tibor and figure out, okay, in gaining your advice on how do I get my pricing right, how do I get my menu right, right? Then three months later, I'm at a good point. Both Tibor and I feel that, hey, my mentor and I feel that we are doing great, we are in a good place, we can move on to other things in the, in the business. And I realized that, hey, now the team is growing, the business is growing. I think I need some coaching on leadership because I want to cultivate a team. I want to cultivate a good cohesive culture. And possibly Andrew is the right person to guide me on the leadership, how to build a team, how to cultivate a culture. So for the next three months, let's say I work with Andrew and get my leadership right. And during this time, we have the resources, we have the templates. So what we are doing is CFF is learning in the background as these conversations happen, we create those tools. Maybe it's a playbook, maybe it's, you know, step one, two, three, do this, do that, and provide this set of resources to the entire cohort so that what I am learning as a single coffee shop owner from Tibor, I can take that application and give it to my peer who's in the cohort. And maybe that person can also learn from the same Resources. So I think that's how we are making it flexible and open, but still, you know, unique. Because you have to be unique. I could have a menu problem, my peer could have a menu problem. But again, the way we are dealing with it or our community and our neighborhoods, we need different answers. Right. So I'm making the answers unique, but I'm also making it accessible across the cohort during that one year program. How do you feel about that?

[B]

I'm just taking it in. Yeah, it's cool.

[C]

Why don't you.

[B]

That's not the right answer.

[C]

That's not the right answer.

[B]

You're saying no, it's just, it's not good to cut in.

[C]

What about you, Andrew, what do you think? Sorry, Tibor, go ahead. My bad.

[B]

No, no, Andrew.

[A]

Yeah. I think, look, there's a lot of value to mentoring and coaching and solving, solving people's problems. Yeah. I'm just reflecting on, on the models, the model here and what I'm really looking for is how joined up, how aligned CFF is the investor with the cafes growing. Re you how, how much alignment there is because the higher the revenue, baseline revenue of that cafe, whether it increases or not, CFF should get a payback on its, on its investment, which is fine. If everyone goes into this with open eyes. You know, you get that payback in if it's 500,000, you get the payback in two years and then the next two years you're doubling your money. So that's a great return. And that's if the cafe itself doesn't grow itself, grow its revenue, if the revenue flatlines, it's, it's a tricky one.

[C]

You know, I'd say one thing which I truly believe, and that's why mentorship and the mentor board is the core engine of Coffee Futures Fund. Because I feel that environment dictates performance. Right. So you have to have the right performance and you have to have the right environment that lifts you up. And that is what CFF is providing. CFF is providing that entire ecosystem. That environment makes you do better and grow sustainably and deliver on your vision. Again, it's not about just the money. It's not about scaling 50x or 100x. That doesn't just work for coffee shop businesses. So think of Coffee Beauty Span as a value aligned partner who's here hand holding you with more than hundreds of years of experience and meaningful capital to take you to the next level and yeah, live your dream, essentially.

[B]

Yeah. And I think you're undoubtedly offering people a very strong look into the operations and the team during the intensive period. I think it's certainly great that people can still in the end decide if they should, should they be selected for the funds, whether to take them or not. I hope that the slight pushing you receive from, from, from us or me on this is fine. I think as a coffee shop owner, we certainly want other coffee shop owners to be very cautious when they're committing to something. But again, I think your model does offer that possibility to think it through. I think it's amazing that you're offering this ongoing mentorship even for the people who haven't received the funds. That certainly seems like a more than generous, like unparalleled actually thing in the coffee world. Unparalleled access to a consultancy. So I certainly hope that many people will be getting the best out of what you have to offer.

[A]

Yeah. And from my side with the alignment, I think, I think there's a risk there for you, and that is that I would be strongly incentivized if I was selected as one of the 10 cafes to go through the mentoring program the first six weeks. I'd be strongly incentivized to take that mentoring, to really think long and hard about my business. And then if I developed a project coming out of that, then I would look for alternative sources for capital because they would have to be cheaper than the source that you're offering. And so that's the risk for you that you're going to help these businesses significantly through a very strong mentoring program. But then the cost of capital to them is so great that they'll be incentivized to look elsewhere for the capital, but to take the knowledge and everything that you invest in them. So I'm concerned about the alignment there's. And it might be worth thinking about how you can mitigate that risk for you and probably do it in such a way that you are really incentivizing the CAFE to grow their business and to take the knowledge, be part of the community, to grow their business and to be aligned with ensuring that you get a return on your investment here as well.

[C]

Yep, that's a good feedback. You know, honestly, I'm. I'm an eternal optimist. So here's what I'd say. I believe in a life of abundance. So the way I'm seeing it, even if they get the mentorship and decide that, hey, funding is not right for us and they go elsewhere, what's to lose? I think the industry is benefiting. We move from four succeeding or thriving beyond five years to five coffee shops at least with that. So I think, I think the industry is growing. The industry is benefiting from this. So that's, that's the long term play that I'm seeing. And yeah, yeah, so, so I mean I'm purely excited. I know there's value in it and I'm just taking smaller steps because there's a lot of learning too. This is the first cohort that we're doing. So there's, there's a lot of learning that we, that will go into this, therefore keeping it small, taking one step at a time and being selective as we move along. So yeah, so I'll tell you this, I'll wrap up with this. My whole agenda from this podcast was to get you to join the Coffee Videos Fund. Did I succeed or not? It's a simple yes, no answer. Guys, I'm just kidding.

[A]

Just kidding. I have no, I have no cafe to be part of it.

[C]

Just kidding. Thank you guys. I appreciate the time.

[B]

You have an amazing list of consultants. Again, like this option to sit in for seven weeks, intense with these people is amazing and everybody should take it. And then when it comes part to signing a contract with very serious financial consequences, then think about it. Well, don't take my advice because I'm not very good at that. But obviously everybody needs to think about it hard and to look into that seriously. Your opening steps and certainly the afterwards consultancy is without a doubt great. So I would be immediately actually signing.

[A]

Fully agree with that, Tibor. I think there's a huge amount of value here. I'm excited about the project and when I first saw it being promoted I was like, this is a cool thing and I think it can add a lot of value to the industry. And I think the retail part of coffee is incredibly difficult, incredibly rewarding, but it's all consuming and any support that can be given to people who are running retail shops to help them develop their businesses and grow within their communities and be part of this Coffee Futures Fund community. I think it's amazing as an opportunities. I wish it, I wish, wish this and, and you all, all the best.

[C]

Thank you so much. Thank you. Have a good day.