A crowdfunding query (would it get approval)

[NewTime]

I have become enormously fed up with my job and I am continuing my sarch for a new one, even taking a paycut as such. But over the last few months after speaking with friends and so on, we spoke about me going back into events of which I had a previous business.

That business was clubbing and *takes deep breath* sex. I left that business as it started becoming a news story and I didn't want my family to know. I posted on here about it some time ago.

But now those asking me to go again, some thinking of investing or private business people wanting to dive deeper into it makes me think about going again and I have started the ball rolling in terms of plans, but with a five year plan.

It would be a events company, with (currently) 9 different events but as one business. Some of those events include the option to have 'a bit of fun' - but we are not a sex club.

But what was a eye opener is what I knew myself as such, but someone drilled in my head is that sex is become less taboo. Onlyfans isn't new anymore and I know friends doing it and there families don't mind (some do, of course).

But I wanted this to be completely new concept. It not to be one event run every month, to be a events company of many events. Take some of the events out of the UK instead of a London and Manchester focus, franchise it in years 4 or 5.

I am stuck with thinking of all the hard work I've done and for the crowdfuning platform to potentially not accept it. Would a crowdfunding website accept and publish it? I look at Angel investors, of which I am speaking to two and I think the same. I have contacted crodfunding platforms and they have stated all they can do is look at it and go from there. I just wouldn't like the cost of a website build to then be told it won't go live.

The valuation of some businesses of the crowdfunding sites are also nowhere near what I see the value of this start-up. I read a bsuiness selling just 4% in shares for a million or so. I see (and would hope) that this business would turnover small number of millions within 3 years, but nothing past that. I have a raise of £350k to start and I don't particular know the % value, but I want the equity of a investor to be decent

I don't know whether tp pay myself a small wage as start-up either.

1) Would a crodfunding platform accept such a proosal?

2) What's a actual equity %?

3) I feel this would be better with Angel investors rather then crowd fund

4) Would you pay a wage?

5) Would you invest in something that maybe seen as 'taboo' or private? If you know you have every chance of return

 

[Mark T Jones]

You'd need to look at specific platforms to see what their rules and guidelines are.

There is an irrational aspect to crowdfunding, which may work in your favour - get a good loyal following and build the buzz before going live. I'd probably suggest rewards-based rather than equity funding.

Investors/angels on the other hand will mostly be focused on the business model and, crucially your ability tu run and build it to give them a healthy return.

 

[NewTime]

You'd need to look at specific platforms to see what their rules and guidelines are.

There is an irrational aspect to crowdfunding, which may work in your favour - get a good loyal following and build the buzz before going live. I'd probably suggest rewards-based rather than equity funding.

Investors/angels on the other hand will mostly be focused on the business model and, crucially your ability tu run and build it to give them a healthy return.

I;ve taken a look at pitches that have gone live already and none of them offer any decent equity. a pre-valuation business of £50m giving away 4%, I don't know where people can see the attraction.

Over the last month I have come to the conclusion that I can't see it crowdfunding vell as it's not a business that would ever turn over tens of millions a year - it's a business I see could be turning over £5m in year 5.

Rewards is something I just can't think of anything that is going to get anyone getting involved.

Getting a large following something I also am not at the point at as I am still hitting sign up issues and considering the amount of money that is raised, the sites themselves aren't the best.

 

[fisicx]

Why do you need £350k? It seems a very precise amount.

Could you not start with a very small local venue to test viability?

 

[WaveJumper]

As above start small before trying to penetrate a larger slice of the market, seriously though you say you were in this sector before, so how did you start was it that successful, again if so where's the profit ready for re investment.

Pretty sure this is not a new format, what would make your events stand out

 

[Porky]

@NewTime
I can’t see a crowdfunding site not listing you for the reason that your events company may provide some adult related events in the mix. Ultimately, Investors are looking for a return on investment, the bigger question is why should they back you, is the investment case compelling enough to warrant backing you, are they likely to see an exit and what will that look like.

There is a misconception put out by some bloggers and media that crowdfunding is some easy route to cash and money will pour in, it is not. You will have your work cut out for you creating an audience. If you take an equity crowdfunding site like crowdcube:-

https://www.crowdcube.com/

Not only would you need a compelling case, business plan, CFF and be able to drive people to your campaign but you would need to create 20% investment yourself before it’s listed. It would be in a private area before live to public. So if you are looking at a £350k raise, you need £70k from family, friends and contacts just to get started - can you do that?

Secondly, on the assumption of the above is sorted, what can you do to create interest. Some of the most successful raises are businesses that can pull on their own business sector audience, like micro brewery business for example where they have patrons that may be prepared to back them. Would any of your event goers be prepared to back you for example?

Thirdly, and this is a factor for me personally, nobody wants to buy you a lifestyle. They are not investing to give you a job/salary. Here you mention at the start of your OP, I’m fed up with my job, looking for a new one, taking a pay cut, yada yada, totally get that BUT that is not a reason to go into business. What skin in the game would you have? How much cash would you put into this events company? Are you in a position to financially back yourself. It would put me off personally backing you if a chunk of the raise was just going on you for example and I see a lot of campaigns failing that don’t reach 100% to get funded because the investment case is just not compelling enough, can you convince me you have the drive to succeed and you are worth backing?

Fourthly, this is another factor, can you prove the plan is viable? Can you prove your previous traction in events but moreover investors will want to know how they will get a return. The equity you give is not as important as what return, in what timeframe is likely. If you are raising using EIS/ SEIS would a three year plan deliver that? These factors are important and realistically should you adjust your plan and try for a lower raise to start with to gain traction. £350k for this business, where you are, is high IMO, might be better to try and raise 10% of that to prove concept and demonstrate what you delivered and how you could scale the events business with further investment.

Finally, it’s not a case of Angel Investor or Crowd funding, if you have a crowd campaign in private nothing to stop Angel investors supporting alongside in that campaign making up a chunk of the target and allowing small investors to make up the shortfall. If you can get one to add a clip why they are backing you that can also help but at the end of the day, it really come down to viability. Based on what you have said here, at the moment you don’t have me convinced you want this for the right reasons but maybe if you can address much of the above you can prove otherwise.

Wish you good luck and hope my comments helpful.

 

[NewTime]

Why do you need £350k? It seems a very precise amount.

Could you not start with a very small local venue to test viability?

£350k is a figure I am working on at the moment. It could be more and could be less, but not by much. Considering this isn't a one-ff event and a concept that houses numerous events that is the number I am at now.

I could start at a local venue, but it doesn't work locally, it works in only London and Manchester where the events are turning over profits each event. It is nothing new in either city to have places that involve sex and clubbing both for gay and straight people.

The problem is as someone who goes to these places, often more so for clubbing and some places are clubbing only, is that there are so many problems - I want to fix those problems, it's not a new concept, it's just being better.

As above start small before trying to penetrate a larger slice of the market, seriously though you say you were in this sector before, so how did you start was it that successful, again if so where's the profit ready for re investment.

Pretty sure this is not a new format, what would make your events stand out

The current format isn't new, but it also includes purchase of two current events who have decided to move on or out of country in one case. As for previous event, the business was turning £700k before I left, but it was a limited offering and private, that was in 2017, as for the market already out there because it isn't new - it is making the events better, each and every event works on what is wrong with the current offering.

 

[NewTime]

@NewTime
I can’t see a crowdfunding site not listing you for the reason that your events company may provide some adult related events in the mix. Ultimately, Investors are looking for a return on investment, the bigger question is why should they back you, is the investment case compelling enough to warrant backing you, are they likely to see an exit and what will that look like.

There is a misconception put out by some bloggers and media that crowdfunding is some easy route to cash and money will pour in, it is not. You will have your work cut out for you creating an audience. If you take an equity crowdfunding site like crowdcube:-

https://www.crowdcube.com/

Not only would you need a compelling case, business plan, CFF and be able to drive people to your campaign but you would need to create 20% investment yourself before it’s listed. It would be in a private area before live to public. So if you are looking at a £350k raise, you need £70k from family, friends and contacts just to get started - can you do that?

Secondly, on the assumption of the above is sorted, what can you do to create interest. Some of the most successful raises are businesses that can pull on their own business sector audience, like micro brewery business for example where they have patrons that may be prepared to back them. Would any of your event goers be prepared to back you for example?

Thirdly, and this is a factor for me personally, nobody wants to buy you a lifestyle. They are not investing to give you a job/salary. Here you mention at the start of your OP, I’m fed up with my job, looking for a new one, taking a pay cut, yada yada, totally get that BUT that is not a reason to go into business. What skin in the game would you have? How much cash would you put into this events company? Are you in a position to financially back yourself. It would put me off personally backing you if a chunk of the raise was just going on you for example and I see a lot of campaigns failing that don’t reach 100% to get funded because the investment case is just not compelling enough, can you convince me you have the drive to succeed and you are worth backing?

Fourthly, this is another factor, can you prove the plan is viable? Can you prove your previous traction in events but moreover investors will want to know how they will get a return. The equity you give is not as important as what return, in what timeframe is likely. If you are raising using EIS/ SEIS would a three year plan deliver that? These factors are important and realistically should you adjust your plan and try for a lower raise to start with to gain traction. £350k for this business, where you are, is high IMO, might be better to try and raise 10% of that to prove concept and demonstrate what you delivered and how you could scale the events business with further investment.

Finally, it’s not a case of Angel Investor or Crowd funding, if you have a crowd campaign in private nothing to stop Angel investors supporting alongside in that campaign making up a chunk of the target and allowing small investors to make up the shortfall. If you can get one to add a clip why they are backing you that can also help but at the end of the day, it really come down to viability. Based on what you have said here, at the moment you don’t have me convinced you want this for the right reasons but maybe if you can address much of the above you can prove otherwise.

Wish you good luck and hope my comments helpful.

These are definitely very helpful comments and a lot that I have not thought about.

In 2014 I started a small events business for high profile and wealthy people, it was a incredibily slow start with less than 30 at each event, eventually by month 6 & onwards we were getting 100+ and 250 regulary. The event entry was significant and I introduced a membership to pay for the admin upkeep. It became a success and profitable within a year to a point I no longer had to pay hire fees.

This was always a small and private venture for myself, to a point where when the money was coming in, I would no longer visit London to oversee the running of it. In late 2016 it ended up in a national newspaper as sleazy gentlemens man - it was completely the opposite. But that made me want to leave, plus the continued security issues of some of the high profile people we had. I sold the business in 2017.

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Since then I have had 18 months working at this, wanting to move on from my job and also questionning if I wanted to go back into events and decided to completely change the business plan and for it to be public events, mainly catered to LGBTQ+ plus and making the events enjoyable and somewhere I want to be, rather than somewhere I do not want to be.

As for the current crowdfuning and crowdcube itself, I have contacted them and the response I get is ppretty poor and that goes for another crowdunfing site (who take 2 weeks to reply to anything). I have spoke about the concept and they say they'll look at it and it is news to me that I would put 20% in, as I have been looking forever around the site to eliminate any mistakes and it doesn't state it. I was already willing to put £x to get imagery and website up and running and everything inbetween, so another re-think for me I suppose.

It is a problem for me regarding getting a following, I know you've got to create a community, but because this is completely new to me I guess before it goes live I will have to learn how to do this.

As for it being a viable plan and trying ti make sure it is not about it being a salary for myself, the manchester scene is especially easily to penetrate, newcomers are entering the scene with club nights but often do not have the money to move foward, with a decent amount of funding and experience in events I think it'll be able to penetrate because the scene is crying out for people who have money rather than getting by with a few thousnads in the bank and not able to market and sustain.

I have already also ben able to confirm venues who are already ready to host me and contacts with councils regarding licencesing spaces that are blank canvas and not already in use.

But thank you for the post, which I have also printed out - as it has some good feedback

 

[Porky]

When I reference 20% I’m saying if your raise is £350k you need your own contacts, friends family etc to fill over £70k in a private setting before it would go live to the public.

Nothing to stop you raising a lower target amount and allowing it to overfill if you got to that position. But you have much to cover off with your plan as outlined before you get to that stage.

The sites are slow to respond but they have a lot of applications as you can imagine. There are also a lot live on private settings you won’t be aware of. You can use Crowdcube 100% in a private setting to act as a placing facility with your own contacts.

Good luck