In 2024, Black Forest Mushrooms owner Nathanael Engen demonstrates how the urban farm grows mushrooms at its downtown Everett location.
File photo by Nathan Whalen
EVERETT — The urban farm Black Forest Mushrooms is staring down closure without a last-minute government bailout.
The ask? $750,000.
The need? To replace faulty production equipment.
The root? Founder Nathanael Engen feels he was screwed from the get-go when he sought financing to scale up, and screwed again in his businesses’ hour of need. He’s already laid off his 20 employees.
The business has been hailed as innovative and a solution to food deficits.
Engen went to the press earlier this month with a demand to meet with the head of Washington’s Department of Commerce.
It’s culminated after months of wrangling with small business loan paperwork and led to trying for a grant.
Now, he has begun asking for the public to help.
He began asking for help from the governor’s reserve fund, but was denied. Commerce decides whether to forward applications to the governor for consideration. He said they misunderstood his circumstances.
Commerce will not be reopening the application.
“This matter is closed; Commerce has responded. If circumstances change, Commerce may consider a new application,” the state department’s spokeswoman Amelia Lamb said.
In correspondence with the Governor’s office Engen shared, the office said their reason for denial is because they say he does not have private investment money in hand. Engen does. Engen said the investors he has lined up are contingent that the reserve fund money comes through and the business is operating.
Everett's mayor and multiple others have lodged letters to the state trying help advocate for Black Forest Mushrooms.
However, Everett, like all cities, does not have the economic resources to offer direct financial assistance to businesses, city spokeswoman Simone Tarver said.
Black Forest Mushrooms produces gourmet mushrooms and jerkies in Everett. He said this makes his business tariff-resistant since most mushrooms are imported from other countries.
The company started in his garage as a COVID-era hobby in cultivating mushrooms varieties. He brought it onto the farmers market circuit in 2022, and opened a full-scale urban farm in a warehouse on Everett’s Hewitt Avenue in fall of 2023.
The mushrooms make a tidy gross profit, but the scaled-up company doesn’t make a net profit.
The $750,000 ask is to buy efficient equipment that does both the incubation and refrigeration in one. They’d need cash up front. The result would be a profitable operation producing 20,000 pounds a month.
The mushrooms are grown indoors in a series of, lets call them, incubator chambers and refrigeration chambers. As equipment broke, rooms began having to be disused. Production output shrunk. Before the equipment to refrigerate began breaking, he was producing 2,000 to 3,000 pounds of mushrooms a month. Now, he can manage a few hundred pounds monthly.
It began breaking down over the past year, meaning Black Forest Mushrooms was hamstrung by making less and less product.
As far as time and money, Black Forest Mushrooms is now out of both.
Engen said he’s in this pickle because the small-business funding he sought in his scale-up effort wasn’t enough to buy equipment which would allow him to produce enough to hit a profitable margin of scale.
He initially sought $1 million, he said. The Small Business Administration gave him $450,000, he said.
Working with what he could, he said he bought inefficient equipment.
His ‘fault’ was “I wasn’t born wealthy,” he said in an interview.
Moving from small farm to large farm of scale requires a large upfront capital expenditure for equipment.
“You don’t typically see many big mushroom operations,” he said. The reason is the upfront cost to cultivate the product, he said.
Because Black Forest Mushrooms wasn’t generating a profit currently, a few routes such as the state’s Washington Flex Fund for small businesses were shut out from him, he said. Private lenders shied away.
“These are all failures,” he said. They say they “care about small businesses, care about farms, care about vets,” but now he is facing this.
If the company goes insolvent, Engen said people should realize the business failure would also be a waste of taxpayer money.
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If a private investor or company willing to work on installments wants contact the company:
info@blackforestmushrooms.com
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Corrections:
The original version of this story contained a few errors of fact.
The story misstated production figures. The company today is producing a few hundred pounds monthly, down from 2,000 to 3,000 pounds. The story reported it was producing 2,000 to 3,000 pounds a month, down from 20,000 pounds. Twenty thousand pounds is the monthly yield predicted if the company gets replacement equipment.
The story reported the denial of a grant from the Governor’s Office was directly because Black Forest Mushrooms has private investment money in hand. This is reversed. The Governor’s Office said, as one reason, the denial was directly because it believes the company does not have private investment money to accompany the grant. (Black Forest Mushrooms says it has private investors committed on the basis it gets the grant.)
The story also said Black Forest Mushrooms won a federal USDA loan. The company was awarded a state WSDA grant. It pursued a USDA loan.
The Tribune regrets the errors.
