Back in March we hosted the second session of Runway East’s popular Lift Off! focused on Crowdfunding. We invited to the stage four entrepreneurs from 4 very different start-ups to share their personal crowdfunding experiences. Our panel was:
– Tom Ball – Founder and CEO of Neardesk
– Anthony Eskinazi – Founder of JustPark
– Eric Partaker – Founder and CEO of Chilango
– Tom Leigh – Founder and CEO of Crowdcube
– Alex Hoye – Runway East / Faction Skis– Moderator
Investment – the word strikes fear into the heart of any entrepreneur. It’s integral to the growth of any business, but can also be devilishly difficult to get. Crowdfunding is a relatively new form of investment, but it’s proven to be a viable source of capital and is quickly becoming a focal point for lots of new start-ups.
Raising funds via Crowdfunding is something that all the panelists acknowledged as needing as much effort as other forms of funding. Crowdfunding is not yet “easy” and it should be complemented by other forms of fundraising, such as friends, family, existing relationships or angel investors.
There are ways to maximise your chances, the panelists discussed how the social side of Crowdfunding is critical to getting the cash in.
“Crowdfunding is about accessing our networks, it’s all about connections.”
Partaker told us “How crowdfunding works makes people think it’s easy—because of channels such as Kickstarter and Indiegogo—but it isn’t. Your product still needs to be easy to understand in order for crowdfunding to work, it has to be simple.” Ball added that shaping a product’s PR image is part and parcel of the social aspect.
You should never stop thinking about the reach of your campaign. Eskinazi suggested reaching out to investors who are already in and asking them to reach out their networks. “Think about competition and what sort of ‘stickiness’ you want—you can’t buy the kind of loyalty that makes crowdfunding successful.”
“You can think of the investor base as a marketing channel rather than a reporting channel.”
Tom Leigh shared his thoughts and wisdom on regulation of crowdfunding in the UK. The government had taken a special interest in encouraging start-up culture, and had placed initiatives and resources to make raising money easier in the UK than almost anywhere else in the world. “Other countries in Europe are only just beginning to follow the model that Britain has set up. Even the US is beginning to catch up. London is an exciting place to be a start-up right now.”
How much traction a firm should have before beginning to embark on crowdfunding?
All panellists agreed that firms should only consider raising through crowd-funding after they have got 20% of funds committed; even if more is raised, don’t make the mistake of expecting the crowd to start a round – they are more likely to join a round that has at least some momentum.…
Should a company should take a strategic or individualistic focus to their consumer base?
Partaker advised that the company should decide based on the kind of business they run; not all companies require the same thing and either solution might work depending on the nature of the product.
Would you have done anything differently if you could?
Eskinazi noted that “I might have researched more about the platforms and systems we were using, or maybe learned to leverage all the resources we had.”
- Don’t expect to raise via crowdfunding until you have more than 20% of your overall funds agreed through more traditional routes
- Catch investors attention, with a punchy video, before going into the investment pitch
- Treat your Crowdfunding campaign like a marketing campaign – do your best to leverage the social aspect
- Use your existing network – ask current investors to reach out to their networks
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