Does crowd funding work?

[MrTanner]

I am looking at financing an idea and am seriously considering crowd funding? Does it work? Would you do it?

I'm thinking a similar style pitch to this one..

https://www.kickstarter.com/projects/753230753/packed-pixels-an-extra-monitor-for-your-laptop

Views appreciated

cheers

Ian

 

[DexSmart]

In US works really well. I guess you need to get viral with your "cause" otherwise you cant get the finance!

 

[Ian J]

I guess you need to get viral with your "cause" otherwise you cant get the finance!

Even that doesn't always work as Louis Tomlinson recently found out when his efforts to raise £2m through crowd funding to buy Doncaster Rovers failed miserably raising less that half

 

[MrTanner]

That's a fair point. There are many good fund efforts that never make it, although would you say going viral is luck or good marketing?

It seems unless it's a 3d printer (there's a lot of these at the min) then raising a big sum is a real challenge

 

[DexSmart]

You never know what might work or not..

 

[Love2travel]

It works if you have a compelling video! If you don't put the effort into selling the item then you won't fair well any avenue you take.

 

[nelioneil]

Even that doesn't always work as Louis Tomlinson recently found out when his efforts to raise £2m through crowd funding to buy Doncaster Rovers failed miserably raising less that half

Safe to say that his investment went down in one direction?

 

[stevesolo]

I know several contacts who have successfully used crowdfunding for loans around the £50K mark. This looks a different proposition altogether and some form of equity financing might be more appropriate.

 

[PaulThompson]

Hi Ian
We've been using crowd - funding for the last few years, we're getting to know very well what will work and how to get the best deal for our clients
There are different models of funding (debt, equity or benefit) and different providers in each sphere, you are only really going to get one shot at the goal so you have to get it right first time.
Drop me a pm if you'd like to explore it a little more confidentially and then perhaps move forward with the funding.
KR
Paul

 

[garyk]

kickstarter tends to favour physical products that are different or a little interesting. Greatest example at the moment is this https://www.kickstarter.com/projects/ryangrepper/coolest-cooler-21st-century-cooler-thats-actually

Its coupled with a great video and you watch it and think 'cool I want one of those'. And that video gets shared alot and its quite a newsworthy item. The packed pixel thing, for me personally, its not interesting enough.

 

[businessfunding]

does crowdfunding work - yes

Is it an easy route to money? No.

You need to find the right platform for you and put together a highly compelling proposition - just as in any type of fund raising.

We 'do' crowd funding (debt finance) it can be very effective but the barriers are at least as high as for private money.

 

[senses]

Crowd funding, is by its essence all about good marketing.
If you can market well, you can crowd fund.

 

[Gordon544]

I have done crowdfunding successfully. I have also raised money from angel networks and institutions.

I am presuming you are referring to equity fundraising rather than rewards based funding? They are both very different. The latter I know nothing about, other than it seems rather silly that someone recently has been allowed to raise a lot of money for a potato salad (though I think it's great fun!).

Crowdfunding, for equity, in the uk is simply a platform for receiving cash. When you are raising cash you need to sell your investment. Mainly that is done face to face. Successful pitches on places like Crowdcube tend to have a load of investors lined up before they go live. So what may seem easy, is in fact not quite the case.

The best way of raising cash is through meeting people, or getting someone else to sell the concept for you, for a commission. If you raise cash via crowdfunding for equity website, get to 70% and the crowd kicks in. You'll get to where you need to be.

If you want to chat about this, feel free to pm me.

Good luck.

 

[BristolRemovals]

Crowd funding, is by its essence all about good marketing.
If you can market well, you can crowd fund.

Bingo, same as many things, successful SEO, successful crowd funding - it all relies on good marketing.

 

[Gordon544]

for what i know, it worked like a charm a few years back... but now it's loosing interest

I am not sure I quite agree with that. Whilst I don't think it will take off in the uk in the way envisaged, it can be done.

I say again, unless you have interested parties ready to invest, then it is hard work. I know a few people who have used it as their sole fundraising tool and who have failed. Most pitches do fail. Interestingly Crowdcube has just raised several million quid. It took them12 minutes, they claim it is the fastest funded pitch ever, in the world. What they didn't tell you was that they were backed by a small number of vc's, so when they opened the fundraising they already had most of the cash lined up. So it was pretty easy for them to convince their retail (ie every day joes) members to get in with the VC's. They are opening offices all over the place too. What I don't get is how they will make it. They take 5% on funds raised (and sell their software overseas). If they use it as a platform for investors to come in via third part introducers, you are looking at a doubling of fees. They are looking to get up to a team of 50 now.

I think this will be a slow burn. What they lack is a ruthless sales capability, ie selling the pitches to their members. They are quite a passive business in that sense.

You will see that most investment is done via high net worthy already introduced to the company which is pitching. Which begs the question, why bother with Crowdcube other than as part of the overall marketing mix.

Of course, I could be wrong!