Crowd Funding

[quikshop]

Does anyone in this community have experiences of crowd funding? I'm thinking more from a fund raising perspective rather than investment. A Google search reveals hundreds of potential sites to use, any recommendations welcome.

 

[Gordon544]

I've done it twice, once successful, once not. If you have any specific questions feel free to ask.

 

[#ServicedOffices]

IMX: Crowdfunding is great, however, please be aware that most websites judge your pitch with a high rejection rate. So its not simply the case of them eliminating any potential scams, pie-in-the-sky pitches etc. and your pitch being determined by what the people think... before it goes live, it will be heavily scrutinized.

I have pitched 3 business concepts on one crowd funding website this year, the first two were great - technological invention based - despite getting professional help with the pitch text to ensure success they got rejected (I have since gone down the more traditional route with one and its materialising well) where the last pitch I did was accepted pending presentation video, this was for an app.

It was one of those 95:5 ratio apps (95% clone of whats been done a thousand times over, 5% new twist with potential). I pulled the pitch without recording a video as on reflection I felt it was too safe and I wanted to focus on more traditional routes of funding for the other two pitches.

I am working on one at the moment alongside this serviced offices business, and the other I am hoping to do in the new tax year.

To summarise, I think crowdfunding is a viable route for funding if you could have got the funding from a bank without wanting a bank loan. It can result in lower interest rates than the bank (if loan not equity) If a bank loan is not on the cards then it could be tricky especially if you are pitching a business that isn't merely a clone of something already out there. This said the site I tried was a more professional site than many (that is regulated) and my pitches were in return for an equity stake in the business.

 

[Gordon544]

Re the above.. I have to admit I find this confusing. You can't expect to have multiple pitches up and for them to work. You have to have one business and work like hell to get the funds in. I feel you were ripped off to get professional advice for your pitch. You could get Kim Kardashian to help you for free, and I guarantee it would make no difference. Fundraising is all about face time and relationships, and luck, of course, not reliance solely on fund raising platforms.

The first fundraising I did was for £7 million. My platform was an old dell laptop and my phone.

My second was my phone and a private investor network, for 100k

The third was my phone and a Crowdfunding website for 100k

My fourth was a Crowdfunding website for 100k

Needless to say, the fourth did not work.

The only successful pitches are those which have 50% plus money lined up before going live. You can't put a pitch up, regardless how good the idea, and expect the money to roll in.

Crowdfunding is simply a platform. It allows many humbler investors to get in the action, but they will only do so once they see the pitch getting busy. To do that, you need cash lined up. Crowdfunding platforms do not pitch your business, they are just platforms. You pitch your business and the best way of doing this is face to face.

Lending platforms are different, because there is an existing business, existing cash, lower risk, interest, due diligence, assets etc. lending platforms are far more popular ways to raise finance albeit for existing businesses.

 

[#ServicedOffices]

Gordon, I should point out that they weren't simultaneous pitches! They were spread across the year, the first and last was through my account; and the second was in partnership with someone else on theirs (60% of funds needed).

You do make a great point about crowdfunding finances. People do make the mistake of thinking they can pitch an idea with no cash and no marketing and expect the crowdfunding sites to drive vast amounts of traffic to your pitch with people pledging money.

You really do have to market the pitch by getting traffic to it. You are quite right no one risks their money until they are confident so many others have taken a bigger risk. I think you generally need 25% prior interest from known investors before going live to stand any chance of making the target.

 

[#ServicedOffices]

I meant 60% of funds secured, 40% needed.

 

[Gordon544]

No, you need to market the pitch by having pre planned investors lined up who will invest on the platform. And you need 50%. 25 gets you nowhere.

 

[PaulThompson]

If you need assistance then as a broker we have extensive experience of a wide variety of crowdfunding platforms and how to get the best out of them

 

[andyk1405]

I am currently in the middle of a crowdfunding project. The best advice I can give is you need to build up a following before you launch. Otherwise it's very hard to get the word out and get it to spread. I think you can research them as much as you can, but it's still a slightly unknown quantity in the UK! People are wary of it where as it's much easy to launch an American project.

We have raised almost 6 grand and we have 4 days left to raise the final 14! We have had some amazing feedback and lots of great comments, but sometimes it's difficult to turn that into pledges. We are still hopeful we can meet our target

A restaurant I love in Chester recently raised 100k to open a second place. However they had 9000 followers on Twitter so an existing fan base. We had 600 followers when we launched.

I think every campaign is different, just get as much info as you can before starting out

If anyone wants to have a look at mine it's here, I'll keep everyone posted on the outcome, lots of interest and pledges today so hopefully that will build and we will see a massive surge in pledges in the final days

https://www.kickstarter.com/projects/1820551321/cafe-at-the-end-of-the-universe-geek-sci-fi-burger

 

[PaulThompson]

Hey Andy
The pitch looks good, hope it gets the traction, I'm sure you are doing what you can
If you don't get fully funded drop me a line, we might be able to leverage against their part funding to get the rest of the finance raised (if they will approve it)

 

[BGC180]

This is a very interesting post with plenty of useful advice. My partner and i were considering using Crowdfunding not because we need the money (although it always helps!) but we felt like it is great publicity for our themed cafe/bar.

What does anyone think of crowdfunding as a means to promote your brand/establishment and not solely to garner more startup funds?

We really would be interested to know if this is a good means to advertise and gain more traction before the launch of the actually bricks and mortar business?

 

[PaulThompson]

I think there's a lot of value in that, ensure you are going to get good value though, otherwise you might be better off spending the cash (fees and interest) on advertising or promotion...
(Am I talking myself out of a client here?)

 

[businessfunding]

This is a very interesting post with plenty of useful advice. My partner and i were considering using Crowdfunding not because we need the money (although it always helps!) but we felt like it is great publicity for our themed cafe/bar.

What does anyone think of crowdfunding as a means to promote your brand/establishment and not solely to garner more startup funds?

We really would be interested to know if this is a good means to advertise and gain more traction before the launch of the actually bricks and mortar business?

Not so sure on this one.

1. I would never suggest raising money unless you have a clear use for it - 'free capital' is closely linked to inefficiency.

2. The funding crowd might be different from your target customer crowd - surely the time & effort would be better spent directly promoting to your target audience?

 

[obscure]

If you don't get fully funded drop me a line, we might be able to leverage against their part funding to get the rest of the finance raised (if they will approve it)

They wont. If you don't meet the funding target you don't get any of the money so there wont be anything to leverage against.

 

[andyk1405]

Yeah that's right we have to get all the funding or we get nothing! We can still do it with a big push, seen a restaurant not far from here raised 30k in the final day so it's not impossible even if it's unlikely

 

[Peanut Butter Man]

I had a recent project up on Kickstarter and asked for £10k for a new piece of kit. I took a bit of a bashing here from some, but never mind that

I got just £266 of my £10 target

However, Tow people did approach me to put in the full £10k I wanted. Both customers/suppliers of mine who didn't realise I wanted funding (I declined both offers)

I also had an upsurge of sales with people finding my product

Was my project a complete failure? I don't think so.

Good luck with yours

 

[andyk1405]

We raised 8.5k of the twenty we needed, but we got so many great responses and so many people who seemed as genuinely gutted as we were that we didn't get funding, had a few offers if funding from other places like you said

We will just go back to the drawing board and get as much info as possible as to why we failed, lots of people saying it's the time of year, which might have something to do with it

We are doing some pop up events early next year so if they take off, and we can keep growing our fan base we might try again in a few months. I think with these kickstarter campaign you can read all you ant about it but until you do one it's hard to fully understand how it works. We will just make sure we learn from this

 

[PaulThompson]

They wont. If you don't meet the funding target you don't get any of the money so there wont be anything to leverage against.

With that in mind why not look at a traditional fund raise (as I mentioned before) and reduce your Kickstarter requirement to something more achievable? (like the £8.5k?)

 

[andyk1405]

I appreciate what you are saying but we were already raising some of the money so 15k was the minimum we needed (we went for 20k on kickstarter because by the time we had paid there fees and paid for the wards that would of knocked at least 3k off)

A few people have said we should of used indiegogo for that reason, we would of got the 8.5k raised, but there isn't much point if you can't achieve what you promised with that amount of cash

We are looking to keep growing our support by doing some pop up events etc and maybe
Run it again if a few months, we may try and lower it to 15k and hope we can do it, as I may of mentioned before a place in Chester recently raised 100k this way, I know they already have a big following but just shows what is possible

 

[PaulThompson]

Andy - Happy New Year!
I guess from looking at the pitch you're in the process of starting again. Give me a call and let's see what we can come up with from the market - you only pay us anything if we're successful so what do you have to lose?

 

[amandamorris]

Good to know that you are planning to raise funds through crowdfunding rather than asking from banks or your relatives. My brother has successfully raised his target funds for which he approached a crowdfunding platform- Business Agent for business idea. I would like to recommend it to you.