An Amazing Range of Businesses Used Crowdfunding in September

Posted on by Clive Reffell

The diversity of businesses I found using crowdfunding in September demonstrate the flexibility and versatility of this alternative source of finance. They included organisations asking for straight donations, businesses offering rewards for donations, and businesses offering equity to prospective new shareholders. The sums involved ranged from £3,000 to £1.25 million. Success has been varied – some might have been popping champagne corks while others might have to look in the mirror and answer some tough questions. I wonder if any will enter the crowdfunding category of the BOLD Awards?

Straight Donations

Cumbria Wildlife Trust had raised 80% of what is needed to buy and protect a 3,000 acre wilderness of Skiddaw Forest in the Lake District. It launched a crowdfunding campaign to raise the final £1.25 million from the general public, and it had reached 85% of this target at the time of publishing this blog. A closing deadline is not visible on their project.

Strongly featured in the news in late September, AFC Wimbledon had to call off their game against Newcastle United when heavy rain caused a sinkhole to appear in their pitch. A crowdfunding page quickly gave the club’s supporters a chance to make donations, and it was great to see Newcastle United chip in with £15,000. As of September 30, the total raised had reached almost £123,000.

A Portuguese association for travel agents is asking for donations towards possible legal costs. They want to start an action against Ryanair for what they claim is “abusive commercial or legal practices.” Some may wish them “good luck.”

Rewards for Donations

A young entrepreneur in Leighton Buzzard has developed a refreshing mist spray with built-in sunscreen. Her financial target on Kickstarter was for £3,000 worth of pre-orders, though her personal aim of reaching 1,000 pre-orders before Christmas will go a lot further to providing product validation to develop her Beame business further.

Tilted Axis Press hopes to raise £75,000. Faced with cuts in arts funding, this independent London-based businesses needs to plug a gap to continue publishing translations of books written by Asian and African authors. It is offering signed copies of newly published titles and will continue to add more rewards throughout the campaign. However, it is progressing slowly and has reached only just over £8,000, though there are 27 days left for people to get behind it.

Pilgrim Brewery in Reigate is offering a range of rewards in a bid to raise £50,000 to buy new brewing equipment. This is the first stage of a complete overhaul that will see them demolish the existing brewery and build a new one to put the equipment in. In the meantime they will be able to keep brewing. The product rewards on offer (some are in the image below) represent discounts of 15% to 20% off their normal taproom bar prices. Here are some further examples of crowdfunding used by breweries.

Equity Crowdfunding

Pro Espresso beat its £110,000 target quite comfortably and raised £151,814. It’s a subscription business that allows members to enjoy top quality coffee at home. The business is supported by an espresso machine manufacturer.

Not so positive are the results for the upmarket Embers Camping holiday company. They had reached 71% of their £200,001 target with just two days left. Perhaps the recent torrential rain and flooding brought home to people what a precarious investment it could be.

No such worries for the chocolate drink specialist Knoops. They had reached their £1 million target within two days of the project being thrown open to the public. This is never a case of just good luck, it is always due to good planning and hard work in the earlier stages.

Fermtech is an Oxford-based startup that produces a zero-carbon protein that adds taste to plant-based foods. With just four days left to run they had raised £364,000, 5% above their £325,000 target for 10.82% of the company’s equity.  

MPower is a Swiss-based company hoping to raise £1 million for 9.89% equity in the business. MPower raises money from retail investors in Europe, and lends it to lower and middle income earners in Africa, plus small and medium size businesses, to acquire solar panels and electrical appliances. Access to an energy source and equipment can transform lives and accelerate the growth of a small business.

Within each of these three forms of crowdfunding, there are some similar basic rules that apply to being successful.

  • Do not go public until you have some guaranteed support that means your crowdfunding will begin with a bang and not a whimper.
  • Keep supporting your crowdfunding project on social media, and by email if you have a database of addresses.
  • Plan each stage of the project and prepare plenty of image and video content in advance.

You can follow me on Twitter to see my updates and comments on crowdfunding projects as I post them. I am an independent crowdfunding advisor with no formal ties to any particular platforms.

BOLD Awards is an international annual award programme for 33 categories of digital industries and the technology that powers them. Crowdfunding is one of the categories. Projects entered into this category should be able to demonstrate the steps taken to invite others to support their cause and help raise funding, though the winner will be a crowdfunding campaign that also delivered much more than just funding. Entries that are at least started before October 17 will miss a €100 increase in the entry fee, and they can be updated any number of times before the final deadline in December. The award ceremony for the BOLD Awards sixth edition is a black-tie event in Lisbon on 28th March 2025. Enter now – and I hope to see you there!

Crowdfunding Tips and Insights are Often Freely Shared

Posted on by Clive Reffell
Crowdfunding tips and insights shared by four crowdfunding experts

It is a very helpful that many people who have been successful at using crowdfunding are prepared to share their tips and insights. This article includes some crowdfunding tips offered by four experienced users.

Due Diligence is often problematic

John Auckland of Tribe First, which provides crowdfunding “boot camps,” shared in a radio show that information given in team biographies often delays the crowdfunding due diligence process more than any other section of the pitch. Every claim has to be evidenced, including the management team’s career history with payslips and tax returns. It’s a challenge and failing due diligence checks can significantly delay a campaign. Rather than deliberately trying to mislead anyone, failure is often because people don’t have the evidence to hand for the claims being made.

“It might sound impressive that you made 10,000 sales last month, or achieved a 300% sales growth in just one year, but can you demonstrate it? If you’re making claims like this, you’ll have to offer the platform a complete list of your sales and show your working.” Source: John Auckland on Kent Business Radio.

This is corroborated by Chris Forbes, co-founder of The Cheeky Panda, a brand of tissues and related products made from sustainable bamboo, not paper (which is essentially from trees). “Entrepreneurs should keep in mind that due diligence is probably the most arduous part of the [crowdfunding] process. You’ll need appropriate evidence for every claim you intend to make in the pitch.” Source: Republic Europe (formerly Seedrs) case study.

Good crowdfunding is good marketing

Chris Forbes additionally shared that each of The Cheeky Panda’s equity crowdfunding rounds was also valuable for brand awareness and PR that lasted long after the rounds closed. 

The business now has over 1,800 shareholders who are also avid supporters and who continue to advocate for, and positively impact the brand.

Every one of the shareholders can be extremely helpful, which is why he ensures that every effort is made to be as communicative and transparent as possible, even after the round has closed, to make sure that no inquiries go unanswered and to take the insights of shareholders on board.

Crowdfunding’s advantages over VC funding

Laurence Kemball-Cook is CEO of Pavegen, an innovative B2B company that generates sustainable electricity from people’s footsteps. In an explanation of why he chose to use crowdfunding to raise early-stage investment, he said the terms from VCs are always restrictive. “They want board seats, control, liquidation preferences, restrictive terms on the founders – all things which don’t favour the company raising money,” he explained in an interview.

Much of this is echoed by Chris Forbes of The Cheeky Panda. “For the last round [of equity crowdfunding] we spoke to a lot of Private Equity houses but they tend to be slower-moving, and we wanted to expedite the process. We didn’t want to give up large percentages of equity, end up with a mix of equity and debt, or undergo expensive board hires which would compromise our profitability. We also didn’t want to be instructed how to spend the funds by external parties. We prefer to do things our way, and the crowd supports that.”

Have a communications strategy

Patrick Dumas is co-founder of Square Mile Farms, a vertical farming business created to bring farming to urban spaces, boosting wellbeing and sustainability. He found that crowdfunding is a very busy, stressful and distracting process. A key learning for their second round of equity crowdfunding, and one of his crowdfunding tips to make it less stressful and more manageable, is to have a clear communication strategy to follow. This included LinkedIn and email outreach from the pre-registration stage onwards. They were more organised and proactive with their communications the second time, with a schedule list to work from.

Like The Cheeky Panda, Square Mile Farms has over 1,000 shareholders from crowdfunding, and the feedback they’ve had from them is overwhelmingly positive, constructive and straightforward, Patrick said in a case study. They issue quarterly updates, and occasionally people respond to them with a lead or recommendation, which they find really helpful.

After immersing myself in crowdfunding for almost ten years I have a few crowdfunding tips and insights of my own. Please get in touch via [email protected] if you have crowdfunding ideas or plans you’d like to discuss.

A Sponsorship Opportunity on the River Thames in Greenwich

Posted on by Clive Reffell
Greenwich Yacht Club clubhouse. GYC is hosting a River Thames yacht race with a sponsorship opportunity

2024 is the 200th Anniversary of the RNLI (Royal National Lifeboat Institution). You may have seen their tv commercials. To celebrate this epic event, Greenwich Yacht Club is holding an open-invitation yacht race on Saturday June 29. This creates a rare opportunity for affordable sponsorship of such a race on the River Thames. GYC is raising money for the RNLI without any financial gain for itself, and it is therefore considered by the river authorities to be a non-commercial event.

The Event

The Tower Lifeboat Race will be from Greenwich to Erith and back, and we are inviting entries from several other clubs based on the River Thames and in Kent. What will make it a unique event for competitors is that rather than a single start time, they can each choose to start when they want. Results of this “Start when you like” race will be based on the time taken to complete the course, and the application of an official handicap system that allows for different boat sizes and speeds.

Supporting GYC’s race, and thus the RNLI, is a great opportunity for any business that would benefit from a positive association with the RNLI’s values and high esteem in which it is held, plus sports and leisure activities on the River Thames more generally. It is particularly relevant for a business that has contact or dealings with any authorities and official bodies relevant to the workings of the river.

River authorities

  • Our racing calendar event and risk assessment plans have to be approved by the Port of London Authority.
  • We must advise people manning the Thames Barrier when they can expect race traffic.
  • We liaise with Thames Clippers and other organisations about our mutual use of the river.
  • GYC is a member of the RYA (Royal Yachting Association).
  • Our members’ safety on the river is supported by the crews at the RNLI Tower Lifeboat Station based at Waterloo.

We are also inviting local Royal Greenwich councillors to come along at the back end of the race and stay for the trophy award ceremony.

Media coverage

  • We will announce the race and supply updates through press releases to national sailing media and media serving London, including Greenwich-focused social media.
  • We will also regularly feature it on our own social media.
  • The sponsor could engage with their own trade or professional sector media, and post content on their own social media.
  • Add details of your involvement to your website, with post-race images of the event.
  • All our communications, the winner’s trophy, and an Eventbrite page for competitors to register can include the sponsor’s name.
  • The sponsor may also choose to attend on the day, invite some guests to our architectural award winning Clubhouse, and present the trophy in person – creating unique corporate hospitality and PR opportunities.

Next step

For further information, to ask any questions, and to discuss fees, please begin by sending your contact details in an email to [email protected]

The sooner you sign up as a sponsor, the more benefits your business will enjoy!

How Do Money, Innovation, And Democracy Make Rewards Crowdfunding Work?

Posted on by Clive Reffell

Reward-based crowdfunding platforms such as global giants Indiegogo and Kickstarter are wildly popular around the globe. Every year, people use these platforms to transfer billions of pounds/euros/dollars to help artists deliver creative productions and content, and for entrepreneurs to develop new products and services. Though what can explain why and how rewards crowdfunding works, what motivates people to give their money?

The money is not given as charity donations. The backers obtain no financial benefits, there are no legal guarantees that their money will be used as originally described, and there are no reimbursement options. These unfavorable conditions led two American academic authors – Andre F. Maciel (University of Nebraska—Lincoln) and Michelle F. Weinberger (Northwestern University) – to ask why do so many people contribute to crowdfunding. In short, what makes reward-based crowdfunding so successful? The answers are enlightening, and are transferable to equity crowdfunding.

Key findings of why crowdfunding works

The two authors collected qualitative data from crowdfunding consumers, producers, and platforms to reveal the sociocultural underpinnings of this funding model. They found that a major part of why crowdfunding works is that platforms do more than create a technical infrastructure for consumers to transfer money to producers: they also create a mythological foundation.

Through storytelling, platforms cast crowdfunding as a route to create a more democratic society in which ordinary people (rather than banks or wealthy investors) can decide and finance the products that should exist in the market. Consumers then gladly gift their money to entrepreneurs and artists fundraising on these platforms, financing their innovation ideas interest-free. In many instances, they don’t usually receive any tangible return on their investment beyond something like a mug or a T-shirt.

Transactions replaced by social contracts

A second part of why crowdfunding works is that instead of a legal contract, crowdfunding platforms establish with consumers a “social contract” based on noble collective goals and intangible returns.

Backing a crowdfunding project comes with risks, and project backers do not receive the same protections as people buying an item from Amazon, eBay, or anywhere else.

Kickstarter gives a warning to potential project backers: “Unlike sellers on eCommerce sites, creators on Kickstarter do not automatically breach their contract with backers if they do not fulfill their rewards or provide users with a full or partial refund.” Similarly, reward-based crowdfunding backers have no recourse if creators fail to pursue or complete the innovative ideas that were their reason for asking for money.

Intangible rewards

However, in exchange for their financial gifts to support market democratisation, these project backers derive four unique forms of intangible value. 

  1. They get to express their tastes by selecting the innovations that they deem worthy of existing in the market—an opportunity that stands out from their conventional experiences as mass consumers elsewhere. This opportunity is even more significant because their tastes are often niche, patterning the immaterial value of “individualistic democratisation.” 
  2. As producers provide updates on their projects’ progress, consumers relish peeking behind the scenes of the entrepreneurial journey, acquiring the immaterial value of “insider knowledge” in their oft-niche areas of interest. 
  3. Consumers derive excitement from betting some money on the ideas of typically unknown producers. When these producers fulfill their projects and send their supporters some reward -typically symbolic tokens and an early version of the crowdfunded project – these consumers experience a “reciprocity thrill.” 
  4. Finally, crowdfunding consumers derive the immaterial value of “vicarious success”: the experience of getting a flavour of the glow of successful entrepreneurship while taking on little risk.

Reward-based crowdfunding’s main limitation

Beyond the consumer/project backers risks, the academic authors also articulate another important limitation of reward-based crowdfunding. 

For creators, reward-based crowdfunding finances many projects that would not receive bank loans or venture capital for lacking a clear profit potential, a trading history, or due to limited ambition.

Crowdfunding as an alternative means to support the creators tends to attract a specific segment of consumers: well-educated professionals involved in industries focused on producing knowledge, technology, and entertainment. These consumers tend to support projects they deem “cool.” They channel money to innovations that match their tastes, hardly ever picking projects based on the potential to broadly enhance social equality or welfare. 

Campaigns in areas such as music, film, publishing and games are more likely to succeed. Crowdfunding does finance many types of projects, but not as democratically as it first seems. 

Key takeaways

Crowdfunding has become a recognised and accepted branch of the digital economy. It is not used only by upcoming entrepreneurs and artists. Universities, museums, churches, and media organisations (including Wikipedia and The Guardian newspaper) regularly run campaigns to raise money from large numbers of people to create and enhance their market offerings. 

The Guardian newspaper part-funds itself through crowdfunding
The Guardian prefers to use crowdfunding whilst its competitors are behind a paywall

As such, this new research on why crowdfunding works is timely in three main ways: 

  • It sheds light on the consumer appeal of the crowdfunding model; 
  • it brings into relief the role of platforms in shaping the meanings of the digital economy; 
  • and it calls into question these businesses’ egalitarian claims.

Fuller research findings were published in the Journal of Consumer Research, and a version of my article first appeared for Crowdsourcing Week, where I began writing content on aspects of crowd finance in 2016.

I am an independent crowdfunding adviser, with no attachments to any specific platforms. Please contact me with an email to [email protected] to find out if I can help you with any ideas you may have of using crowdfunding. To search my blogs for other content you may find useful use the Search facility at the top right of the page.

Why crowdfunding works so well for craft beer brewers

Posted on by Clive Reffell
Why crowdfunding works well for craft beer brewers

Crowdfunding is a proven and popular way for craft beer brewers to raise money to expand or accelerate growth, or even to start in the first place. It is also a popular way for many thousands of beer drinkers to be able to say “I own part of a brewery.” Here is what I consider to be the key factors.

Funding sources for craft beer brewers

Crowdfunding is popular with craft beer brewers because there are few barriers to using it, beyond the hard work it involves. And many brewers already have a crowd of buyers and drinkers to appeal to who consume their products on a regular basis.

Bank and P2P loans are restricted to businesses that are already trading, with an income and a future order book that looks solid enough to make the repayments. An existing brewer may be able to secure a bank loan, but a new startup won’t. Banks also require guarantees against loans, and if a brewery goes bust its owners will still be liable for the debt. That’s not a comfortable feeling.

As for VCs, the craft beer sector is very fragmented with many small players. From 2018 to 2022 the number of UK brewers grew from 1,489 to 2,426.

Number of breweries in the UK from 2018 to 2022

Graph showing the number of UK breweries

             Source: © Statista 2023

Organic growth is typically slow. It can be difficult to scale fast as it is the antithesis of being a craft product. An exit strategy of an eventual sale to a big drinks company would be difficult to achieve as they have already had their pick of the crop. The Budweiser owner, AB InBev, acquired Camden Brewery; SABMiller purchased Meantime, which was local to me in Greenwich, south east London; Carlsberg took over London Fields; and Heineken acquired Beavertown, founded by Logan Plant, son of the former Led Zeppelin vocalist Robert Plant.

As well as limited opportunities to scale, many of the newcomers seeking funding don’t want to raise enough money for VCs to even consider them in the first place.

Crowdfunding is flexible

During Covid, several brewers turned to reward-based crowdfunding to ask customers for their support. Pre-Covid, the Manchester Union Brewery had relied on keg sales in on-trade outlets. When lockdown closed the pubs, they asked their community for donations to install a canning line that would enable them to switch to online orders for home delivery. Incentives to support their appeal included discounts off future purchases, shorter waiting times for deliveries, and inclusion on a “Wall of Honour.” It raised £46,141 from 617 supporters in 64 days.

This method of crowdfunding continues to be used by breweries to raise money to build or expand taprooms (which are on-site public bars). As an example, in March 2021, the Skinners Brewery in Cornwall raised £152,301 from 2,449 supporters in 28 days to build an outdoor drinking area at its site in Truro. Perks for donors included beer vouchers, tickets to exclusive events, branded merchandise and online sales discounts.

Skinners Brewery in Cornwall raised money through crowdfunding to build its outdoor drinking area

Bringing forward demand to generate pre-payment by offering beer vouchers can ease short-term cashflow issues, but has to be carefully judged so that those issues aren’t merely delayed until another time.

Many startup breweries offer shares in the business through equity crowdfunding. One running in November 2023 was Signature Brew, whose business model is to brew collaboration beers with bands and musicians. Founder and CEO Tom Bott had exceeded the £700,007 target for 4.59% equity by +25% with a few days left before the round closed.

Crowdfunding is popular with startups, but not it’s exclusively for startups. Exmoor Ales was established in 1980, and in March 2024 it closed a crowdfunding round that had raised £330,048 from 329 investors. Perks for investors included the standard branded merchandise, discounts on online orders, and a limited amount of free beer for life for larger investors as long as they remained a shareholder.

Good crowdfunding is good marketing

Running a crowdfunding campaign can generate significant media coverage and social media buzz. It serves as a marketing tool, creating awareness about a brewery and its products. This increased visibility can attract not only backers but also potential customers.

In 2023, the southeast London Gipsy Hill Brewery brewed the first carbon-negative beer without using offsets. In October ’23 they began a round of equity crowdfunding and announced their aim to be the world’s first carbon-negative brewery by 2030. The crowdfunding raised awareness of the brewery’s carbon reduction accomplishments to date and future aims. The founder and CEO was interviewed by the Sunday Times, and a television station camera crew turned up to film him at the brewery.

Crowdfunding empowers consumers

Benefits for backers

The most commonly hoped for outcome from investing in an equity crowdfunding campaign is a good return on investment. The founder of Camden Town Brewery, Jasper Cuppaidge, used equity crowdfunding in 2015 to raise £2,749,860 to build his own brewery in London. The amount of equity this involved meant the brewery was valued at around £50 million. Eight months later, having come to its attention, and seeing the extent of its public support (good crowdfunding = good marketing), AB InBev bought Camden Town Brewery for an estimated £85 million. In under a year, the 2,172 crowdfunding investors had secured a 70% return.

Successful crowdfunding does not always mean that a brewery will go on to achieve long-term commercial success. There is a risk. After 25 years the Skinners Brewery in Cornwall was forced to close in October 2022, despite its new outdoor venue paid for with crowdfunded donations.

However, small-scale investors know that a low entry cost to buy some shares can be recovered through using the online discounts that are often offered as perks. When they have saved enough money it effectively means they have reached a breakeven point and become a shareholder at no cost.

When businesses are registered under the HMRC’s EIS and SEIS schemes, crowdfunding investors who are UK taxpayers can reclaim from 30% to 50% of their initial investment. Any eventual return on investment is outside of Capital Gains Tax, or if the business sadly fails then even more of the initial investment can be reclaimed through the taxman.

Beyond ROI, sociable investors like to meet like-minded people at investor events, and can visit a brewery’s taproom bar at any other time to seek out kindred spirits.

Some investors like to invest in several breweries to create an annual schedule of perks of free or at least subsidised beer deliveries at home.

And of course there is the opportunity to drop “I’m a part owner of a brewery” into conversations.

Non-monetary benefits of a brewery having a crowd of backers

Crowdfunding is not just about raising money; it’s about helping to build a community around a brand or a business.

New crowdfunding research findings reveal that crowdfunding backers enjoy a sense of deciding which companies and products will make it to the marketplace. It gives them a tenuous link to the buzz of entrepreneurship with little personal risk – depending on the size of their investments.

I believe it’s then reasonable to consider that having contributed to the existence of a brewery, its new brewing equipment and premises, or a taproom, the crowdfunding backers will be very loyal.

Regular visitors to a brewery taproom can be encouraged to try limited quantities of new beers and give their feedback. Or packaged products could be delivered to crowdfunding backers at home. This form of product validation helps decide which new beers to take to full production.

Brewery supporters, whether investors or donors, can also be very useful as brand advocates. They can give word-of-mouth support and encourage friends and colleagues to try a brewery’s products. They may be able to provide vital business connections and make introductions, and also personally offer to provide a range of services from accountancy and legal advice to decorating offices and servicing vehicles.

To summarise, beer is a product that relationships can be built around, rather than simply regard an investment through crowdfunding as a transaction. Anyone who leaves it at just taking the money is missing a trick or two.

Crowdfunding’s popular for food and drink brands and restaurants

Posted on by Clive Reffell
Food and drink crowdfunding examples October 2023

Of the crowdfunding campaigns and related news I noticed in October there was a high proportion that were food related. This includes startup food brands and restaurants. Entrepreneurs and startup founders in these sectors have identified that as well as raising funds to invest in the business, well planned and executed crowdfunding also represents good marketing.

Crowdfunding for food and drinks brands can stimulate trial, prompt consumers to ask for them in their local outlets, and increase brand loyalty among existing users who can become investors. New shareholders can also become valuable customers in a virtuous circle that gives crowdfunding backers a strong motivation to become brand advocates and ambassadors.

Similarly, crowdfunding used by restaurants can bring forward consumer demand and have them pay now for meals they will enjoy at a later date. From burger and coffee chains to Michelin-starred restaurants, it provides customers with a talking point to recommend a favourite place to go to friends and colleagues. Perks such as limited places for cookery lessons, or even meals prepared by chefs in crowdfunding backers’ own homes can deliver a wow-factor to make the backers feel special, and once again give them a talking point.

Crowdfunding backers also have the chance to get to know about the people behind startup food and drink brands, and restaurants, and maybe identify with their broader aims from an increasingly ESG or community asset perspective.

Crowdfunding by Restaurants

Chefs Lewis Dwyer and Andy Aston opened their independent Michelin Star restaurant called Hiraeth in Cowbridge, Wales, last November after raising £30,000 of reward-based donations through crowdfunding. They now need new premises after the landlord unexpectedly decided to sell the property.

Chef Merlin Labron-Johnson had already beaten his £125,000 crowdfunding target with 10 days left to run. He was raising money to relocate his farm-to-table restaurant Osip 2.0 in Somerset. His crowdfunding went on to achieve £166,261 from 464 backers to help bring this project to life. As perks, he offered branded restaurant crockery, chocolate cookie tasting sessions, hampers of mixed goodies, lunch and dinner at the restaurant for groups up to eight people, and home cooked meal for fifteen, and tickets for an exclusive opening night party.

Equity crowdfunding by London-based Honest Burgers’ closed after raising almost £3m. The casual dining restaurant group soundly beat its £1m target, raising £2,905,631 from 3,456 investors. It will now open further restaurants and launch a new quick-service burger.

Founded in Barcelona in 2020, startup coffee chain GoodNews is soon launching a round of equity crowdfunding after three previous seed and Series A funding rounds, which have already raised €15m (£13m). Good crowdfunding can be good marketing and attract loyal customers.

Startup founders Florin Grama and Felix Ortona Coles met while working at St Barts restaurant in London’s Smithfield Market area. In October they began reward-based crowdfunding to raise £20,000 for the final pieces of equipment they needed to open their Tarn Bakery in Highgate. Perks include classes to make croissants, sourdough pastry and pasta. By October 29 they had reached £15,242 with eight days left to run.

Crowdfunding by food and drink startups

With the growing demand for minimally processed and natural plant-based food, Tempeh brand Better Nature has launched another round of equity crowdfunding as part of a £1 million-plus raise to drive retail growth for its meat alternative range across the UK and Europe.

Hertfordshire-based SRSLY Low Carb has signed an agreement with a food distributor that services leading supermarket chains in all 50 US states. To support global growth, SRSLY is embarking on a seven-figure equity investment round which includes a round of equity crowdfunding in November with a minimum target of £500,000.

Earlier this year, craft beer maker Gipsy Hill Brewing in southeast London launched the world’s first carbon-negative beers, achieved without relying on carbon offsets. A new crowdfunding campaign in November will help them accelerate their climate-positive agenda. The brewery ran its first equity investment round in 2022, in which 581 investors joined its community and invested £865,149, 130% above Gipsy Hill’s target.

A former City analyst founded the Cheesegeek food marketplace platform in 2017 to connect artisan cheesemakers with consumers. Edward Hancock now hopes his equity crowdfunding campaign in November 2023 will raise £150,000 so he can start a forum for cheese fans, with investors invited to develop a new variety.

French plant-based food brand La Vie closed its equity crowdfunding in October with 2,691 backers investing €2.1 million. La Vie, whose UK headquarters are in London, used the Crowdcube platform which through its Barcelona office is authorised to run crowdfunding campaigns throughout the EU as well as in the UK. La Vie’s multi-award-winning plant-based alternative to bacon is available in 13 European countries. The brand claims to have so far saved over 90,000 pigs and 2 million tonnes of CO2.

Considering crowdfunding?

If you are thinking about running crowdfunding, and in any sector, not just crowdfunding for food brands, the most common mistake is to not allow enough time for preparatory work. This can include building larger networks of followers, and for those considering equity crowdfunding the platforms will require you to have lead investors prepared to guarantee a minimum of 30% of your target raise.

I am an independent crowdfunding strategist and adviser, unattached to any particular crowdfunding platforms. Please get in touch for objective advice and insights into your plans, and maybe hands-on support if you decide you want it. Send an email to [email protected] to get started.

A Snapshot of Small Business Crowdfunding Projects

Posted on by Clive Reffell
Examples of small businesses using crowdfunding

Crowdfunding’s a great way for small business owners to raise alternative funding that’s usually not enough for VCs to be interested. An article published in September 2023 by Small Business Trends gave an overview of five types of crowdfunding, plus five benefits that crowdfunding delivers.

Crowdfunding can certainly do more than just raise money for a business, and here are more than five benefits.

  • Crowdfunding can provide social proof and product validation to show that startup business founders are going in the right direction.
  • It can also be used by existing businesses of any age to develop new products and expand.
  • Early crowdfunding backers can provide valuable feedback as a business tries to fit all the pieces of a jigsaw together to achieve success.
  • Early backers can also become brand advocates in a virtuous circle that allows customers to become investors and investors can become important customers.
  • Pre-orders can de-risk the first production run of a new product, and even multi-national companies including Sony, Coca-Cola and Mattel have used crowdfunding to test consumer demand. 
  • Crowdfunding is very flexible and not only for consumer-facing businesses. Although it’s not exactly small these days, B2B mineral extraction company Cornish Lithium has just closed a crowdfunding round having raised £5.1m.
  • Whatever type of business you have, a well planned and executed crowdfunding campaign also provides great marketing support to build awareness of a business and attract interest. Get in touch if you want to discuss your ideas.
  • Crowdfunding opportunities can also appeal to everyday retail investors who choose to support companies that are active in certain specialist business sectors.

Fashion

Recycled clothing is becoming more and more popular as awareness grows of the amount of waste in the fashion and clothing industry. Immaculate Vegan is an upmarket vegan and sustainable fashion platform. Encouraged by 56% year-on-year sales growth, it launched an equity crowdfunding campaign that closes/closed on September 26. Its target was £200,000 – it reached over £300,000 from more than 300 investors.

Cycling

There have been many successful small business crowdfunding projects in the cycling sector. I guess they appeal to people who want to invest in businesses that may help get people out of cars and tackle air pollution.

Two years ago, the Smart Tyre Company startup in Ohio, USA, developed an airless tyre for road bikes in partnership with NASA. They claim they have both the elasticity of rubber and the strength of titanium, and made them available through crowdfunding on Kickstarter. With 16 days to go at the time of writing, almost 300 backers had pledged just short of £125,000 to order a set of the innovative bike tyres.

Scottish startup Intra Drive is also using equity crowdfunding, through Crowdcube, to help bring its new 8-speed mid-drive for e-bikes to market. The redesigned e-bike motor comes with enhanced efficiency that simplifies manufacturing; a lighter gearbox; integrated electronics; an innovative display interface; and it is easier for manufacturers and consumers alike to fit it.

Healthtech

Healthtech startup AudioTelligence launched a crowdfunding campaign for its hearing enhancement device. Having decided to go-it-alone rather than sell out to an established rival, their small business crowdfunding goal is £400,000 to fund the manufacture of an initial batch of 1,000 units. Feedback from these early backers will be very valuable to aid product development.

Sport

The company that owns both the Cornish Pirates rugby club and Truro City football club in Cornwall, Kernow Sport, has raised over £413,000 from nearly 500 investors by offering equity through crowdfunding. It’s the first stage of raising a £2.5m total as the main benefactor begins to wind down his personal investment in the two clubs, reported the BBC.

Small bsuiness crowdfunding can support sports clubs like the Cornish Pirate rugby team

Community-based projects

The legendary Filmhouse Cinema in Edinburgh is raising the first £250,000 of a total £1.25m needed to re-open with a 21 year lease in its existing building which is being refurbished.

By September 17, a 2021 Masterchef contestant was over 80% of the way to raising £35,000 through reward-based small business crowdfunding to help him open a new restaurant in Bishop Auckland, northeast England.

Proptech

Small buiness crowdfunding helps raise smaller sums than VCs are interested in

HouseStars is an AI-powered app that connects property owners with building trades people. It is 98% of the way to its £125,001 equity crowdfunding target on Seedrs. As at September 25 there were 23 days left to run. SEIS investor benefits are available, which for taxpayers include a rebate through the tax system of 50% of the amount invested.

Food and beverages

World Tea News reported that New York-based Leaves of Leisure, a luxury herbal tea brand with a focus on zero and low caffeine teas, has launched a crowdfunding campaign aimed at growing the brand and expanding into new markets. CEO and Founder Allison Ullo hopes to raise $50,000.

Crowdfunding, through offering equity or bringing new products to market, is definitely a strong option for many small businesses with big ambitions. I am an independent crowdfunding adviser, with no ties to any particular platforms. Whatever sector you work in, crowdfunding is very flexible and could play a role to help turn your innovation and dreams in to life-changing reality. If you’d like an objective assessment of how crowdfunding could provide a solution for you, and how close you are to being ready to use it, then please get in touch. Send a message to [email protected].

What are the main criteria for choosing which crowdfunding platform to use?

Posted on by Clive Reffell
Crowdfunding platforms available in the UK

There are different types of crowdfunding, and plenty of platforms to choose from for generating donations to a charity or a worthy cause; asking for help to complete new product development; personal fundraising, such as for medical costs or educational fees; accessing loans at lower-than-high-street interest rates; buying and selling shares in privately-owned businesses; and using a crowdfunding platform as a distribution channel to generate pre-paid product orders. The choice of a crowdfunding platform can significantly impact the success of a campaign, particularly for startups seeking business finance. So it’s important to carefully consider the following 15 criteria for choosing which crowdfunding platform to use.

  1. Type of Crowdfunding: There are different types of crowdfunding, including donation-based, reward-based, equity-based, and lending-based crowdfunding. Choose a platform that aligns with the type of crowdfunding you’re looking to use for your campaign.
  2. Fees and Costs: Crowdfunding platforms usually charge fees for hosting campaigns on their platform. These fees can vary significantly and may include platform fees, payment processing fees, and other charges. Evaluate the fee structure to understand how much of your funds will be used to cover these costs.
  3. Target Audience and Niche: Some platforms cater to specific niches or industries. Choose a platform that attracts backers who are interested in your project’s field or sector.
  4. Geographic Reach: Consider the platform’s global reach and the countries where it operates. Some platforms are more popular in certain regions, so choose one that aligns with your key target audience’s location.
  5. Platform Reputation and Trustworthiness: Research the platform’s reputation, history, and success stories. Look for reviews from other campaigners to gauge the platform’s reliability and trustworthiness. Platforms that are members of the UK Crowdfunding Association are obliged to follow the UKCFA Code of Conduct.
  6. User-Friendly Interface: A user-friendly platform with an intuitive interface can make it easier for both campaigners and backers to navigate and participate.
  7. Campaign Support: Check if the platform provides resources, guides, and customer support to help you create and manage your campaign effectively.
  8. Visibility and Exposure: Some platforms have a larger user base and better marketing reach, which can increase the visibility of your campaign. Consider the platform’s ability to help your campaign reach a wider audience.
  9. Fund Disbursement: Understand the platform’s policies regarding how and when funds will be disbursed to you. Some platforms release funds only after the campaign reaches its funding goal, while others may allow earlier partial disbursements.
  10. Flexible Funding Options: Some platforms offer flexible funding, where campaigns receive the funds even if they don’t meet their target goal. This is known as Keep What You Raise. Others use an All-or-Nothing approach. Choose the one that aligns with your campaign strategy and your available budget to run your crowdfunding. You don’t want to incur costs and then realise you aren’t going to have any money.
  11. Social Sharing and Integration: Look for platforms that have social sharing features and integrations with social media platforms. This can help your campaign gain traction through online sharing.
  12. Analytics and Reporting: Consider platforms that provide analytics and reporting tools to help you track the progress of your campaign and understand your backers’ behaviour.
  13. Legal and Compliance: Different crowdfunding models have legal and regulatory implications. Ensure the platform complies with relevant laws and regulations for your type of campaign.
  14. Intellectual Property Protection: If your campaign involves a product or innovation, research how the platform handles intellectual property protection to safeguard your idea.
  15. Community and Engagement: Platforms with active communities and engaged backers can provide valuable feedback and support for your campaign.

Ultimately, choosing a crowdfunding platform should align with your campaign’s goals, target audience, and the type of crowdfunding you’re using. Carefully review your options and choose the platform that best suits your needs. If you want some help, I am an independent crowdfunding advisor with no ties to any particular platform. Send me an email to [email protected]. Or follow me on Twitter where I regularly post news about crowdfunding campaigns.

The main image shows some of the crowdfunding platforms available to use in the UK – apologies to the ones I have left out.

Building Sound Foundations for a Startup Through Crowdfunding

Posted on by Clive Reffell
Louis Timpany, founder and CEO of Fix Radio

I was fortunate to meet recently the founder and CEO of the startup Fix Radio station. Louis Timpany did some building site work as a student and experienced the building trade’s love affair with the radio. He listened to their gripes and grumbles about what was on offer, and then set about creating a different type of startup commercial radio station that better suited their listening habits – sometimes all day, most days – and also championed their causes. He then had to set about monetising it to build a secure future for his niche radio station which is outside the established pattern of how a commercial radio station operates these days. Louis turned to equity crowdfunding.

After starting with a regional presence based around London and Manchester, in 2022 the station was granted a national digital licence. Since then its listening audience size has grown by nearly 250%, and national advertisers including B&Q have recognised the Fix Radio station’s ability to deliver a key advertising audience with low wasteage.

The station also gets behind what matters to the building trade. Such as the grim statistic that men who work in construction have the highest suicide rate of any industry sector in the UK. The seemingly never-ending introduction of one-way roads and width restrictions make life more difficult for builders – and their clients. Post-Brexit immigration rules are exacerbating the construction sector’s skills shortages, and escalating fuel and building material prices mean it’s harder to manage costs and make adequate profit.

For those of you that know me, I spent a couple of summers as a student preparing for each September’s new rugby season by working for a local builder, and later I spent six very rewarding years working at the generic marketing body for the UK commercial radio industry. There was a certain inevitability that I would sign up to Fix Radio when I came across their crowdfunding campaign in 2022, and I was one of nearly 350 investors who backed the station with over £950,000.

The funds allowed Louis Timpany to scaleup his startup radio station by expanding his team; run promotional events across the country to build awareness among potential listeners and commercial supporters; and sign up to industry acceptable audience measurement research. Naturally I wish Louis and his team great success!

If you have a startup business and are thinking about how to raise a budget to accelerate growth, please get in touch to discuss whether crowdfunding is going to be appropriate for you. I will provide you with independent crowdfunding advice and set out a seven-stage appraisal to get you ready.

5 Reasons for Equity Crowdfunding Success

Posted on by Clive Reffell
equity crowdfunding success for a doughnut company

Many startups using crowdfunding offer techie apps or fintech products and services, but it was a Midlands-based doughnut company that recently enjoyed phenomenal equity crowdfunding success.

The Project D doughnut company, set up in 2018 by three former schoolmates, launched an equity crowdfunding campaign in May 2023 to raise £400,000 and accelerate the company’s growth. It already had an annual turnover of £2.6m prior to the crowdfunding, and had set an aim to reach £12 million in three years. They were staggered to receive, in just a preliminary private investment round, pledges of £2 million. This was before it was even open to the general public. They used the Crowdcube platform, which is a major one for equity crowdfunding offers in the UK.

The three founders were left wondering how to respond: how much added equity would they open up to crowdfunding investors? Some people may think they should just take the full £2m on offer from investors in the private round, and then go ahead and generate even more from the public round. However, given the high demand for their equity, they could scale back now and possibly come back soon with another round at a higher share price.

Equity crowdfunding success like this is great to see, though it doesn’t happen very often to this degree. And it does also present some problems. I began to think about what the reasons or the circumstances were that caused this surge of popularity. Five factors came to mind.

1. Project D has a low-entry-cost product that significant numbers of customers have been able to try, and evidently decided they like the doughnuts and the way the company operates its D2C order-taking and delivery. They have a substantial community of over one million people to attract as investors. They had obviously done some good data capture work to be able to communicate the crowdfunding offer to them.

2. A lead investor had guaranteed £150,000 – 37.5% of the initial £400,000 target. That gives smaller investors confidence to go ahead.

3. The business had used social media very cleverly to raise brand awareness, with viral videos on its Tiktok account receiving 19 million views in a single two-month period.

4. Project D can claim corporate accounts with British Airways, Brewdog, Amazon and Rolls-Royce. It might have been no more than a delivery to a local office, but big brand names add cachet and boost investor confidence.

5. The company has also won multiple awards including being named the first-ever winner of the Online Bakery Business of the Year category at the 2022 Baking Industry Awards.

To investors, it must have looked like a tasty winner all the way! There are lessons here for all sorts of companies in many different sectors about customer data capture, effective marketing, the value of corporate accounts and the reputational benefits of entering and winning awards.

If you are considering running a business-related crowdfunding project, and want to discuss it with an independent crowdfunding adviser, then please get in touch by an email to [email protected]. To keep up with crowdfunding news, events and projects you can follow me on Twitter.