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10 Top Tips for Crowdfunding

Posted on October 30, 2017 by Clive Reffell

In my role as an independent crowdfunding adviser I attend many live pitching events and meet plenty of people who have run successful crowdfunding projects. My 10 Top Tips are based on many meetings and conversations with people working at crowdfunding platforms and with entrepreneurs who have run successful crowdfunding campaigns, mainly equity based and some donations-for-rewards projects. This is intended more for commercial enterprises than fundraising for worthy causes, though many aspects would still apply.

Examine projects by other crowdfunding users in your business sector.
Build your own networks of relevant people for as long as possible before going live. Every person you have ever met is a potential backer! This crowd-building includes making professional media contacts to ensure a good response to press releases in your local area and sent to relevant trade/business sectors.
Thorough planning and preparation is vital. Decide on who (the types of people) you want to tell about your offer; create in advance what you’re going to tell them (the content); plan when to tell them (don’t overload demands on your own time by telling everyone all at once, stagger it); decide which communications channels to use – social media, PR to secure media coverage, meetings and events, content marketing, paid-for advertising. You might want to start getting media coverage months in advance to allow time for items to be published so you can refer to them in your crowdfunding pitch.
Pre-sell to your closest contacts and supporters so that you can count on at least 30% of your funding target or pre-orders arriving in the first few days. This gives the project vital momentum and encourages other would-be backers to get off the fence. Also check for opportunities through your crowdfunding platform (when your project is accepted by one) to identify and contact backers in their network with a relevant investment/product history.
Ensure you and your partners/support team (a team of people is important because most crowdfunding attempts by a sole individual fail) have appropriate social media skills, or have a budget to access some.
Crowdfunding can be a fulltime role. Why wouldn’t it be? Success is possibly going to transform your life for the better. Organise your day job, maybe by taking on temporary support, so you have the time to answer questions, send out information, and personally meet prospective backers. Don’t forget – people invest in people, get out and meet some would-be equity investors or people who could place large orders.
Set weekly targets to monitor progress and check that you are doing enough, and establish what’s working well and what isn’t. Change your plans based on your weekly assessments to do more of what’s working best.
Make it easy for your backers to tell their own networks about your crowdfunding project, provide them with content to use by email and in various social media formats.
Be flexible to accommodate other opportunities that may arise, such as offers of retail distribution or interest from an angel investor.
Invest some time on your new backers because they could turn in to important brand ambassadors for your business.

In short, you will need:

soft ‘people skills’ and confidence to engage persuasively with potential backers;
an ability to segment audiences and identify key prospects;
skills to harness the power of the written word;
social media skills;
an easy-to-deliver and understand SMART business plan and financial projections (Specific, Measurable, Achievable, Realistic, Timetabled);
a budget to bring in extra help and any skills or capabilities you lack within your immediate team (such as video production, effective use of social media, writing press releases, organising events);
a campaign plan with KPIs to monitor progress;
and maybe a campaign manager to help you hold it all together and make it work, if you think you need one.

Or contact me, an independent crowdfunding adviser, at [email protected] or on 07788 784373. I can take you through a seven-stage assessment of your readiness to start crowdfunding and identify areas that ought to be strengthened before you go ahead. Then we can start planning how you will achieve success.

Top 10 US Reward and Equity Crowdfunding Platforms

Posted on May 25, 2017 by Clive Reffell

Mass digital connectivity has significantly disrupted the business investment market. Online crowdfunding enables company owners to trade equity for funds to invest in growth. Who’d have thought 10 years ago that it would be possible for business owners to raise seven-figure sums from people they didn’t know, or even have as a customer? The vital stepping stone was the sometimes massive sums raised on reward crowdfunding platforms. Except early backers are unable to invest in the companies themselves, only acquire their often innovative products.

Reward crowdfunding

Kickstarter is the world’s largest reward crowdfunding platform. It was launched on April 28 2009 in New York as an alternative way to raise funding for performance arts projects and productions. Its model is to encourage low value donations from a large group of people rather than a lot of money from a few individuals.
It quickly expanded to cover many other hobby, craft and product categories, and has raised almost $3.05bn through hosting 124,935 successful projects (the figures are updated daily by Kickstarter).
It has an “all or nothing” policy meaning projects that fail to reach their target don’t receive any funding and the backers who made pledges don’t pay anything. Successful projects pay a 5% commission plus up to 3% transaction charges.

Indiegogo actually launched first in January 2008 in San Francisco, again as an alternative way to raise funds for arts projects. Indiegogo also quickly grew to host projects in many different categories.
A significant difference is that Indiegogo allows projects to receive the money that’s pledged even if they fail to reach target. When this happens their regular 5% commission rises to 9%, plus there are always transaction fees of approximately 3% on every project.

Since 1 January 2014, Indiegogo has hosted slightly more projects than Kickstarter: 231,900 vs 218,896 (as measured by crowdfundingcenter.com on May 17 2017). However, Kickstarter has hosted significantly more that reached their target – 68,984 vs 26,272.

Based on these figures Kickstarter has an average success rate of 31.5% and Indiegogo achieves 11.3%.

These two broad scale platforms dominate the US reward crowdfunding market and to have a point of difference the next largest platforms focus on specialist business sectors.

PledgeMusic is third placed behind these two giants, as measured by website traffic. It launched in August 2009, aiming to do for the music industry what Indiegogo and Kickstarter were doing at the time for other arts genres. It is used by all types of people from hopeful wannabes to established performers with an existing fanbase.
It operates like Kickstarter on an “all or nothing” basis for people raising money to complete a project like record an album, and on a “keep what you raise” basis when people use it as a sales channel for any finished content that can be downloaded. It charges a flat and all-inclusive 15% commission on “sales” and fundraising projects that hit or exceed target. This looks expensive though they claim a success rate of over 90% for the average 100 projects they carry per month.
The platform operates globally by accepting payments through credit cards and Paypal.

Seed&Spark is an industry specific crowdfunding platform for the tv and film industry and is based in Los Angeles. It launched in December 2012 and within an overall aim to build an independent film community it provides filmmakers with a reward-based crowdfunding facility. They claim a 75% success rate.
Projects must reach a minimum 80% of target to keep the money pledged by backers. Then upon completion of a film, any project that also gathered over 500 backers is automatically eligible for distribution through Seed&Spark and their partners including all major cable and digital platforms such as iTunes, Comcast, Verizon, Netflix, and Hulu.
Seed&Spark charges a 5% fee on successful projects, though offers project backers the opportunity to add this to their pledge. Many choose to do this and on average the crowdfunding projects themselves pay just 1.9% of funds raised to the platform.

Barnraiser is a platform for artisan food producers, small farmers and exponents of sustainable, healthier living. It encourages its community of over 30,000 like-minded people to crowdsource advice and contacts from each other, and also provides a rewards crowdfunding facility they claim has a 65% success rate.
It launched in 2014 and 187 projects have been successful. The largest amount raised was $93,190.
Successful projects are charged a 5% fee based on the amount raised plus payment processing fees of 3-5%. If funding isn’t successful there are no fees.

Equity crowdfunding
Title III of the JOBS Act came in to effect in May 2016 and extended online equity crowdfunding opportunities to Americans earning under $200,000 per year, though included limits on the amounts that could be invested. New platforms were launched to provide a full online equity crowdfunding facility to this wider market, whereas the previous ones serving higher net worth individuals (“accredited investors”) required transactions to be made offline.

The Wefunder platform tracks progress of this new retail equity crowdfunding sector based on mandatory Form CU filings on the SEC’s EDGAR database. Since May 16 2016 to May 23 2017, just over $35.8m has been raised through Regulation Crowdfunding offerings.

Wefunder is the early market leader and it launched in 2012. The minimum investment size is $100, and Wefunder has created internal Investor Clubs in order that part-time investors in its network can access the wisdom and leadership of more experienced and professional investors and combine their investments with them on equal terms.
Wefunder members have provided 55% of all online equity crowdfunding investments through Regulation Crowdfunding in the first 12 months of online equity investment trading being open to non-accredited investors.
Investments made through StartEngine, which is based in LA and launched in June 2015, represent nearly 22% of the Regulation Crowdfunding total raised so far, according to SEC figures. StartEngine also raised $17m from 6,600 investors under Regulation A+ for its client Elio Motors.
In 2016 Indiegogo ventured into equity crowdfunding in partnership with Microventures to launch a platform called First Democracy VC. To date it has accounted for 9% of the sector’s total $35.5m.
NextSeed is based in Houston and its investor network has invested $2.8m in equities, 8% so far of the combined Regulation Crowdfunding. Investors can put in as little as $100 and NextSeed’s equity crowdfunding projects have ranged from as low as $25,000, typically for personal leisure/entertainment/service providers such as bars, restaurants and hairdressers.
NextSeed also provides companies with debt facilities which contribute to their claim of having provided their clients with total funding of $3.8m.
Three other platforms in this sector tie for fifth place as they have each raised in the region of $1m for clients from equity investors:

Republic (offers Reg CF only and investments can begin at just $10);
SeedInvest (which mainly focuses on non-Reg CF raises of over $1m);
FlashFunders (where Reg CF investments can start at $50 and they also handle Reg D raises over $1m and Reg A+ raises up to $50m).

Whilst equity crowdfunding is now at least possible to some degree for everyday Americans, and there are some equity crowdfunding platforms that at last provide the single “one stop shop” we are accustomed to in the UK, there are still some built-in restrictions that impede faster growth. These include businesses cannot use Regulation Crowdfunding to raise more than $1m (about £833,000).

If you are based in the UK and considering any form of crowdfunding to raise money for a business startup, to scaleup an existing business, or to use a crowdfunding platform as a sales channel for your products, then please get in touch if you’d like a free and confidential consultation with an independent crowdfunding adviser – which is me! Call 07788 784373 or send an email to [email protected].

How crowdfunding can turn a holiday idea in to business reality

Posted on March 20, 2017December 31, 2020 by Clive Reffell

Let me guide you through the inspiring journey of The Cheeky Panda, a business idea to make toilet tissue from bamboo pulp that started on a 2015 holiday in China and then used rewards crowdfunding to test product viability and financially de-risk setting up a company, plus much more. Successful equity crowdfunding completed in August 2017 gave the company founders a business valued at over £5m. By June 2020 they had grown it to over £50m!

The founders of The Cheeky Panda are Chris Forbes and Julie Chen, based in Essex. In 2015 they took a holiday to China for Chris to meet Julie’s family. They couldn’t help but notice huge quantities of unused and unwanted bamboo lying around. Bamboo is a grass not a tree, and grows so fast there are three crops a year. Local communities had a requirement for only 10% of the bamboo that grew around them, and how to develop a commercial opportunity from the 90% literally left lying around became something that intrigued Chris and Julie.

Their eventual idea was to make tissue paper, and the first version was toilet rolls. This was a great choice, as tissue made from bamboo pulp rather than paper is stronger, softer, and naturally more hygienic. Their idea also had strong economic and ecological benefits: it would create work, benefit the local ecosystem to clear away some of the surplus bamboo being left to rot, and making tissue from bamboo produces a 65% lower carbon footprint than making it from trees or recycled paper.

Beginning the manufacturing process for a first trial quantity needed an order for a minimum viable volume, and without any distribution outlets lined up for an as yet unproven product it would have been a gamble to go ahead. Rewards crowdfunding de-risked the process.

A six week campaign on Crowdfunder in early 2016 required £10,000 of donations and pre-orders to trigger the first production run. If support didn’t reach this level there would be no obligation to fulfil any pre-orders, and it would tell them their idea wasn’t such a good one after all. And without product validation Chris and Julie would have put their entrepreneurial efforts in to other business ideas instead.

The volume of toilet tissue they would receive from China would be enough to meet the crowdfunding pre-orders – priced at just enough below the cost of premium paper products to be attractive yet provide a sufficient yield – and give Chris samples to take to potential retail stockists. This really emphasises they were using rewards crowdfunding as a stepping stone to launch a business, and not using it as an end in itself as a limited project to just make a quick and short-term return as a side issue.

Success could transform their lives, and they believed it was worth some considerable effort. While continuing with their regular jobs they put in an estimated 20 hours of work a week for four months to product research, planning and eventually execute their crowdfunding campaign. And they set aside £2,500 to make an animated video, create a website and conduct their marketing.

Their marketing strategy relied on stunts, parties and personal appearances, always wearing their photogenic Cheeky Panda hats to generate media coverage they amplified through their website and social media. They also courted relevant trade and professional media, and through a flexible content plan achieved coverage in Management Today and FMCG News (fmcg = fast moving consumer goods, a “must read” for anyone in the supermarket business) as well as local media in Essex, the Daily Mail and Huffington Post. I met Chris and Julie at an event at Brand Exchange, a business networking club in The City, where their distinctive headgear invited people to approach them.

My contribution of independent crowdfunding advice to their already well-advanced efforts was to suggest a corporate angle, to approach Chinese companies based in London such as Cathay Pacific airline as potential customers, and to contact the Chinese Business and Social Networking organisation, which Julie signed up to within a few days.

In reality, they had left little to chance. Chris had used his contacts and business skills to personally pre-sell their new product and gain pre-commitments to begin their crowdfunding with high impact. Strong early support creates momentum and confidence to encourage other unknown people to become involved. By just eight days in to their six week crowdfunding campaign on Crowdfunder they had hit 67% of their £10,000 target.

Their further marketing efforts closed the campaign on a high as they reached almost £13,000 of orders and donations. As a crowdfunding backer I received an e-mail with an expected delivery date of my ‘reward’ (45 rolls!), but then received a second one to say there would be a delay. It was for a very positive reason, they were changing from cheap plastic to biodegradable packaging.

This was affordable, and would be a positive note for longer-term reputation and growth, after a financial backer who had tracked their progress asked to be involved in the company. Their rewards crowdfunding with its well-planned and professionally executed marketing had also found them an angel investor.

In summary, The Cheeky Panda founders invested a total of £5,000 and lot of effort in a rewards crowdfunding project that achieved:
• Product validation from 67 backers who supported them to the tune of £12,785 of donations and pre-orders;
• A visible media profile in local and national press, general business management and specific supermarket retail media, and online in ecological and current affairs platforms;
• Stock samples for discussions with retailers and other stockists;
• An angel investor.

The Cheeky Panda range expanded with facial tissues, their products were available on Amazon and through a number of ‘health stores’, and by March 2017 they were in negotiations with a major supermarket chain.

September 2017 update
In August The Cheeky Panda ran an equity crowdfunding campaign on the Seedrs platform. Based on a pre-crowdfunding company valuation of £4,653,000 they were seeking to raise £350,003 in exchange for 7% equity. They over-funded and reached a figure of £521,314. With this amount added to the pre-crowdfunding valuation The Cheeky Panda became a company with a value exceeding £5million. Quite a stunning achievement given the co-founders had a business idea on holiday just two years previously.

2020 update
In 2019 their product range added award-winning babies’ nappies after they had started their own family, and as I add this comment in 2020 I can say I regularly see their products on the shelves at Tesco. After further corporate backing and two more rounds of equity crowdfunding (the last one completed in May 2020) The Cheeky Panda has a company valuation of over £50 million.

What do you do with inspired business ideas you have on holiday? Please share them with me, in confidence, if you’d like some independent and objective insight on using crowdfunding. Let’s assess the viability of using some form of crowdfunding – whether rewards, equity or debt – to make your dream become a reality. It could change your life for the better, like it has done for Chris and Julie at The Cheeky Panda. Drop me a line at [email protected].

Networking with crowdfunders in London (Part 2)

Posted on January 30, 2017February 21, 2017 by Clive Reffell

This is the second part of a two-piece blog on attending five crowdfunding-related events in eight busy days in London. As an independent crowdfunding adviser such events give me great insight in to crowdfunding motivations from the perspective of the crowdfunders, the crowdfunding platforms, and investors whether they are high net worth individuals, angel investors or venture capitalists. Here is a link to Part 1.

Networking with crowdfunders in London (Part 2) The fourth event in my sequence of five was a visit to The London Business Show 2016 at Olympia. Among hundreds of exhibitors and scores of seminar presenters I heard Henrik Ottosson of equity crowdfunding platform Invesdor and Bill Morrow, CEO of angel investment platform Angels Den.

Angels Den also ran two live crowdfunding sessions during the day and at one of them I saw pitches from three businesses that were seeking investment. The levels of investment being sought ranged from £60,000 to £250,00 (which had £175,000 already pledged).

TrooGranola, a family business making fresh granola and offering 12% equity for £60,000 investment. Already on Tesco’s radar.
Flexiapp, a free app for people to find and book a wide range of yoga, dance and fitness classes with a variety of smaller, specialist instructors as well as mainstream providers. Offering 15% for £150,000. Free for users, 30% commission payable from class instructors.
Eat Grub, what it “says on the tin” – highly nutritious energy bars made from insects and kinder to the environment than cereal bars. They were chasing the final £75,000 of a £250,000 investment target for 20% equity.

The final event was a combination of entrepreneur and investor perspectives. Equity crowdfunding platform VentureFounders staged an event hosted by Pennington Manches LLP, a leading UK law firm.

Keynote speaker was Justin Urquhart Stewart, co-founder and Head of Corporate Development at Seven Investment Management LLP. SIM “helps individuals and their families manage capital to meet their financial needs and aspirations,” and now looks after over £7 billion of their own and their clients’ money. He gave an entertaining quickfire summary of his take on topical political and economic global developments. Some of his comments included:

The Euro is ultimately bound to fail, he said, though not quite yet while Angela Merkel is on the scene. What happens if she isn’t re-elected in 2017?
The growth rate of manufacturing in China is slowing down, but not dropping as some media have mistakenly reported. And their services economy is growing too.
The emerging economies not doing so well are the ones whose economies rely on exporting natural resources – such as Russia and Brazil. The nations doing better are the ones that import resources and make things, particularly China and India.
Trump wants an annual growth rate in the US economy of 5% – but it’s impossible to grow an economy that big that fast.
The world’s overall business growth rate is about 3%, which is also the average of the last 50 years or so. To have reached 3% so soon after the 2008 financial crisis shows the world’s major economies are in relatively good shape.

VentureFounders specialise in equity crowdfunding for companies already in business, so their platform is for scaleups and not startups. There were pitches from four companies whose crowdfunding was at the time hosted on the VentureFounders platform, and between them they were seeking from £500,000 to £1.1m

Samba Networks, a mobile software company that addresses advertising avoidance for advertisers and app developers, aiming for £500,000 for 10% equity
Fatsoma, an ‘influencer marketing network’, on the day of this pitch they had received pledges of £650,000 out of a target of £1.1m
freemarketFX, a peer-to-peer currency exchange for companies with better rates and lower fess than banks
Lightpoint Medical make imaging equipment enabling cancer surgeons to remove all affected material in the first operation, reducing the need for repeat operations which is good for both the patients, the hospitals, and other cancer victims who won’t have to wait so long for a hospital bed. Without it, 1 in 4 prostate and breast cancer patients still have cancer left behind after their first surgery. CEO Dr David Tuch received the 2016 Start-up Entrepreneur of the Year Award.

I’m often asked how much equity a client should make available. Or how much money to ask for. Of course the answer is “it depends”, and it depends on a variety of factors, including the company valuation, target market share of the specific business sector any company operates in, and an investor assessment of the likelihood of achieving it. This was adequately brought home by seeing 19 sophisticated equity crowdfunding pitches in 8 days.

If you are considering equity crowdfunding and want to talk with an independent crowdfunding adviser not tied to any particular platform, or maybe you’ve already decided to go ahead and want to get a second opinion on some aspects, please e-mail me at [email protected] or send a Tweet to @Cliveref.

The sharing economy at work in recreational boating

Posted on January 13, 2017February 21, 2017 by Clive Reffell

As an independent crowdfunding adviser I had my eyes open among the hundreds of exhibitors at the 2017 London Boat Show (January 6-15) to find ones operating on a crowd economy/sharing economy business model. This article features three of them, the oldest being twelve years old and the youngest is a brand new company that launched at the show.

Beds on Board is a simple concept to grasp. It’s like Airbnb except all the accommodation is on boats that don’t leave their mooring. Since 2015 it has operated as an online as a peer to peer platform connecting boat owners and accommodation seekers. The average amount of time an owner uses their boat is the equivalent of just six weeks a year, so they are very often vacant though still with on-going costs of a mooring place (usually in a marina) and maintenance. Yachts and motor cruisers not only depreciate, but also cost approximately 10% of their capital value per year to keep and maintain. Beds on Board enables owners to have an income from renting their boats at minimal risk to overnight guests who aren’t going to do any sailing or cruising.

Boat owners with safe, comfortable boats with shore-side access that comply with all local laws and regulations can list their boats for accommodation-only rentals by guests. Guests looking for alternative accommodation and who respect boats and marinas can search for boats to stay aboard and enjoy a novel way to relax at their chosen destination in over 40 countries. Once accommodation seekers sign up on the website, they are able to make bookings after identifying their required date, number of people and a verified payment option. The owner then has 48 hours in which they can veto a booking if they have any reason to.

There are some ground rules to follow (e.g. no parties and anyone not on the booking form not allowed on board), and all guests have to be able to swim. At the end of the booking the owner and guests rate each other to encourage mutual best behaviour.

A company that does rent out privately owned boats for sailing is the brand new Borrow a Boat. At the same time as most boats remain unused for the majority of time, the cost of boat ownership remains prohibitively expensive for the majority of people. Borrow a Boat connects people wanting to enjoy boating with boat owners who welcome a contribution to the cost of ownership. Through working with partners they have standardised requirements for qualifications, experience, insurance, boat safety, and charter contracting. This has made the whole process simpler and more accessible for people wishing to enjoy recreational boating.

The three founding partners all share a passion for boating and have spent much of their lives on the water. They definitely know their bowsprit from a bow thruster and can talk with comforting authority to owners and renters alike.

I’ll talk in greater length about the third exhibitor using a crowd economy business model. Twelve years ago, before any of us had heard of or even imagined going online to share car rides, parking spaces or spare bedrooms with people we don’t know, FlexiSail launched itself as a closed-user group boat sharing business based on the English south coast. I caught up with their Business Development Manager, Susannah Hart, to hear more.

As with all boat charter companies, FlexiSail’s aim is to make recreational boating more affordable and is designed to give a greater number of people an opportunity to get out on the water regularly without actually buying a yacht or motor cruiser. Their key difference is achieved through a boat share membership scheme. As opposed to a traditional boat charter business that offers access to an interchangeable pool of vessels, each boat user commits themselves to just one particular boat from FlexiSail’s fleet. They pay a fixed monthly membership fee determined by the size and how often they wish to use the boat of their choice, and when they have that boat booked out it is exclusively theirs.

Through this method of exclusive access the boat users share some of the ‘pride of ownership’, though without the long-term costs, commitment or worry as FlexiSail completely look after, maintain and manage every boat in the scheme. It is this sense of ‘ownership’ which really sets the FlexiSail model apart from other boat charter initiatives as it helps boat owners trust the boat users to keep them in immaculate condition. What also reassures the boat owners is that FlexiSail ensures all members have appropriate sailing experience and qualifications for the boat they wish to use. On signing up, members gain access to an exclusive RYA (Royal Yachting Association) Training Centre – FlexiSail Training.

It is also possible to join FlexiSail as a crew member and be available to help on the boats under the command of fully qualified sailing members, the temporary boat ‘skippers’. This is not only for less experienced sailors but for anyone who is unable to make the full commitment of a FlexiSail boat share – even some sailing instructors are signed up to FlexiCrew.

Consequently, the main advantages for boat owners when they place their boat in the FlexiSail Ownership Programme are:

a guaranteed income
their boat will be professionally managed and maintained
the hassle, worry and costs of ownership are offset
there are adequate safeguards and controls in place to protect their asset

In keeping with the growth of the rest of the global crowd economy, the key to the development and success of FlexiSail’s membership sailing model is the advancement of technology. Their online systems are designed for members to autonomously manage their own bookings, further engendering that sense of ownership.

FlexiSail’s iCalendar booking system gives people the greatest amount of flexibility. Bookings can be made up to 12 months in advance and amended or cancelled at the touch of a button. All members are entitled to a certain amount of time throughout the year, dependent on the level of membership they buy into, and this time is guaranteed, the system knows this and over-booking cannot occur.

Standard charter companies rely on labour intensive check on and check off procedures. This increases costs and also means a third party has to be present. This not only restricts flexibility of embarking and disembarking times, but also takes away the feeling that it is ‘your’ yacht. FlexiSail has a comprehensive online system called the iBosun, which allows each member to take care of all of this without any restrictions. A simple form, the iBosun is completed on arrival and departure, and any issues reported are emailed directly to the FlexiSail management and maintenance teams to be dealt with in a timely and competent fashion.

FlexiSail currently provides access to 18 boats for 175 boat ‘skipper’ members plus 25 crew members. Their annual turnover is in the region of £700,000 and they are considering crowdfunding as a means to purchase their own boats.

From one perspective these three examples are about people being able to create an income from an under-used asset within an online framework that vets the users of that asset to protect the owner. Crowdfunding is similar: people with under-used wealth are able to potentially gain a higher income from it through investing in companies pre-vetted by the equity crowdfunding and peer-to-peer lending platforms. However, equity investments cannot be guaranteed to provide a return, or even to hand back the original investment, so do so with due diligence and the standard advice is always to invest in a range of companies to offset risk.

From another perspective it’s about people having access to something that was previously our of their reach, whether it’s the use of a fantastic yacht or motor cruiser, or access to funds to launch a startup company or expand an existing business. If that’s what you want to do then as an independent crowdfunding adviser I can help you with your first steps of understanding how crowdfunding can work best for you, and work with you to create an effective pitch to investors. Contact me at [email protected].

Close encounters with the crowd economy at Southampton Boat Show

Posted on September 29, 2016March 15, 2017 by Clive Reffell

Southampton Marina hosts the largest outdoor annual boat show held in Europe, so perhaps it should have come as no surprise for me as an independent crowdfunding adviser to have encountered aspects of the crowd economy there among the hundreds of exhibitors and the opening day celebrity guests.

The event was officially opened by actress Michelle Keegan, formerly of Coronation Street and currently on our tv screens in the BBC drama Our Girl. On stage with her was the GB Sailing Team from the Rio Olympics boasting four gold medal winners.

Olympic success in a wide range of sports has been achieved with financial state support for our top athletes through National Lottery Funding for UK Sport. Every purchase of a lottery ticket contributes a small amount towards crowdfunding national sporting achievement at the highest level. The benefits to the nation are wide ranging:

with more role models to aspire to more people take up or maintain a sporting pastime – which the government encourages as part of the health battle against increasing obesity;
association with success puts a spring in the step, encouraging greater productivity and optimism;
it inspires more people in all walks of life to achieve excellence in whatever it is they do.

In a similar ‘organisational crowdfunding’ vein, an event on Day One of the show was the official handover of a new yacht to the Ellen MacArthur Cancer Trust. The carefully adapted yacht will be used to take children recovering from cancer treatment on confidence-building sailing adventures and has been funded by the People’s Postcode Lottery. Every ticket buyer has made a contribution.

Sailing has a reputation as something of a rich person’s hobby, sometimes described as similar to standing under a shower and tearing up money. FlexiSail has utilised the crowd sharing model to make boat ownership less onerous for owners and to provide access to a “pride of ownership” to a far wider audience. Boats are expensive to buy in the first place and then expensive to maintain and moor somewhere. Yet most of the time they are unused and simply take up space in a marina.

FlexiSail offers a choice of membership options for people to choose from a range of 30 to 40 foot yachts, catamarans and motorboats and use them for a fixed number of days or weeks throughout the year, explained Business Development Manager Suze Hart. Reassuringly for the boat owners FlexiSail also arranges training to ensure everyone has appropriate skills and qualifications, and provides a full two day induction on board any chosen boat. They maintain an online calendar for members to book their time aboard, online logbooks for all the users of each boat to keep a record of problems and any work that needs to be carried out – and FlexiSail carries out the work. And the boat owners have turned their depreciating assets in to an income stream with safeguards in place.

Finally, a vital and integral part of sailing for many boat lovers is a gin and tonic on deck or in the cockpit at the end of a day on the water. In a corner of the Ribeye stand at the boat show Howard Davies, Co-founder and Director of his own brand new gin brand was providing very welcome samples. puedes comprar viagra en la farmacia

The Salcombe Distilling Company, based in Salcombe in Devon, batch produces hand-crafted gin made with obligatory juniper and a secret blend of other botanicals. Premium products like this don’t come cheap and Salcombe Gin retails at £35 a bottle. Howard, who spent part of his previous career path as a sailing instructor, only gave up other employment this summer to concentrate on his new venture, in much the same way that many hand crafted spirits brands have come on the market in recent years.

A search using industry data provider Crowdsurfer showed 15 new distilleries/spirits brands used crowdfunding in the last 12 months in the UK. Crowdfunding is extremely flexible and can be used in a variety of ways to match very different requirements. Some used it on a rewards-for-donations basis, others traded equity to gain long-term investors.

At the lower end of financial targets, one person wanted £3,000 in donations to convert a unit in a suburban London market in to a tasting room and install a micro-distillery to make gin, and a couple of guys raised £30,000 through donations for rewards of branded merchandise to establish a malt whisky distillery in Devon.

Meanwhile, at the top end, the Cotswolds Distillery raised just over £1m from 124 investors at the end of January 2016 in exchange for equity – double its target of £500,000 – and GlenWyvis Distillery in Scotland had raised over £2.5m by July 2016 (against a target of £1.5m) using “community shares” through the crowdfunding platform Crowdfunder.

I hope that Howard’s gin proves to be popular and when he is ready to expand his Salcombe Distillery Company he’ll get in touch with me to explore the benefits and opportunities that crowdfunding could deliver for him.

Maybe you have a business you want to launch or expand? I am an independent crowdfunding adviser, please feel free to contact me for an initial conversation about what crowdfunding could do for you and how I can guide and help you through the process. Send an email to [email protected]. I have gained a wealth of experience in a 30+ year career in Marketing, and it is increasingly evident that implementing a good marketing plan helps attract investment.

Day One of a global crowdsourcing conference in London focussed on crowdfunding

Posted on April 19, 2016July 7, 2017 by Clive Reffell

On April 12 the historic Regent Street Cinema in London witnessed the first full day of the 2016 Crowdsourcing Week Global Conference which focussed on crowdfunding. Here is a recap of the day, writes independent crowdfunding adviser Clive Reffell.

Crowdfunding within crowdsourcing
Conference organiser Epi Ludvik Nekaj of Crowdsourcing Week and the first speakers of the day set the scene. Affordable, mass communication technology enables high levels of personal connection and interactivity. This has caused a clear disruption to previously accepted ways of appreciating what’s around us and how we access what we want or need. Through C2C networking we can increasingly find what we want without having to go to an established B2C provider – whether it’s goods, services, entertainment or information. And not only are we beginning to increasingly appreciate that the planet’s resources are finite and at risk, but also change our behaviour to reflect this.

A modern Old World generation is happy to have access to what it wants or needs without the proviso of personal ownership. Hence the ‘sharing economy’. Accommodation and travel are the largest sectors of the sharing economy. We share spare bedrooms on Airbnb – an organisation that after just four years has access to more rooms than Hilton Hotels – and empty seats in our cars through Zipcar, LiftShare and BlaBlaCar. And through equity and loan crowdfunding people with adequate disposable incomes are willing to invest in or lend it directly to others who want a chance to create their own business and realise their personal potential.

Panel session: "Can banks afford to ignore crowdfunding?" — Panel session: “Can banks afford to ignore crowdfunding?”

Crowdfunding and banking
In the meantime, traditional sources of business funding from banks that are no longer perceived as trustworthy are increasingly restricted by regulation and compliance. Tech entrepreneurs in their 20s are developing financial tools that banking C-Suite bosses don’t even understand, let alone have the vision to steer their organisations to a future where they may embrace some of them.

So the supply of funding for startups and SMEs continues to shift. Crowdfunding supported the launch of over 4,000 UK businesses in 2015, said Emily Mackay, CEO of Crowdsurfer.

Crowdfunding data
The demand from entrepreneurs for better crowdfunding information to increase their chances of success has led to a raft of companies collecting, analysing and providing data on the crowdfunding industry. As well as Emily Mackay of Crowdsurfer, Barry James of The Crowdfunding Centre and Modwenna Rees-Mogg of Crowdrating were also on stage during the day.

Crowdfunding platforms
Crowdsurfer estimates there are almost 1,800 crowdfunding platforms around the world. Between them they offer opportunities for backers to support businesses in a wide range of industry sectors, and for platforms such as Ethex to specifically provide investors with ethically sound opportunities. The site allows people to “invest in businesses that are changing the world for the better,” said Sarah Flood, and it is the top social investment platform in Europe with over £30m invested so far.

Equity crowdfunding platforms were represented by CEO Goncalo de Vasconcelos of SyndicateRoom. To him, the most important aspect is not the money that crowdfunding pulls in but how much is going to be paid out to investors. If the source of the money dries up because investors get disappointed or short-changed then it’s all over for everyone. His own platform reassures investors with a stringent selection of projects they host so that only two out of 77 projects funded on SyndicateRoom have so far ceased trading. The average failure rate among all new businesses is more like 90%.

With a twist on donations crowdfunding for money, Fanuel Dewever’s Belgian platform Crowd Angels enables projects to directly ask for the goods, services and human resources they require. He identified the biggest reason for projects failing is the lack of a clear demonstrable need for what’s being asked for that will allow backers to feel they have made a contribution to something significant. Issues such as easing a short-term cash flow problem are certainly important to small business owners but it does not get backers queuing up to part with their money.

Who uses crowdfunding?
The companies that use crowdfunding are also increasingly diverse. Through the launch of their app Patrum even the Vatican uses crowdfunding to raise money to restore its historic architecture and many of its art treasures, and we heard from Father Mark Haydu (above left) on how this 2,000 year old business approached and handles it.

Christian Johan Smith of the California-based TrackR raised over $2m on Indiegogo in exchange for their tracking devices for people to trace and retrieve lost, stolen or simply misplaced items.

Eric Partaker of Mexican food restaurant chain Chilango has raised a total of £5.5m, first through a mini-bond that offered interest repayments of 8% p.a. and raised £2.1m and then through an equity round that raised £3.4m. But it wasn’t plain sailing. After the success of their first two outlets the third and fourth ones bombed – at one stage the company was seriously close to going under.

It isn’t easy
Crowdfunding may sound easy when large figures like these are bandied around, though everyone involved with the conference agreed that successful crowdfunding requires thorough preparation and extremely hard work. It isn’t charity, it certainly isn’t easy money, and about 3 in 4 projects fail to reach their target funding level.

If you want to improve your chances of success with the benefit of some professional marketing input, I am an independent crowdfunding adviser. Click here to e-mail me or here to see my website for Comanche Communications & Marketing.

Four live crowdfunding pitches received a guarded response

Posted on February 29, 2016May 11, 2017 by Clive Reffell

By independent crowdfunding adviser Clive Reffell.

Live crowdfunding events give entrepreneurs valuable opportunities to deliver their pitches and receive insightful feedback from an interested audience.

An enterprising accountant, Irfan Khalil, has formed a ‘Finance for Startups’ group of over 4,000 people who are interested in equity crowdfunding. Most fall in to one of these four categories:

they want to trade some equity for a cash investment in their business,
they are looking for investment opportunities,
they are at an early stage of considering using equity crowdfunding,
or like me they provide professional services that are useful to equity crowdfunders.

Irfan organises monthly meetings at a variety of London venues. There are slots for four or five entrepreneurs to pitch their business investment opportunity in just five minutes to four or five panellists. The panellists have five minutes to ask questions, and then a final five minutes to provide feedback on what they like, what they consider ought to be better thought through, and so on.

At the end of these ‘formal’ proceedings there is then about 45 minutes of networking for everyone there to exchange ideas, experiences and contacts. Each event has a very collaborative feel to it.

February’s event was in Camden. Four entrepreneurs pitched their opportunity to five panellists in front of over a hundred people.

The panel consisted of (r to l):

Peter Richards, a partner in Venture Pilot, which provides technology organisations with a scalable structure for growth;
Amarjeet Hans, Director of Crystal Clear Business Consultants Ltd;
Raimonda Junkanaite, an entrepreneur and early-stage business adviser who is setting up CrowdVelocity, a crowdfunding-for-donations platform;
John Elsdon, Chairman of the management consultancy Allied Powers;
Akeem Famuyiwa, an intellectual property specialist and an entrepreneur with a background in pharmaceutical science.

The four entrepreneurs and the opportunities they pitched to the panel and the audience were as follows.

.James Grant, founder of Weavee.co.uk. James is creating an app that connects job vacancies, recruiters and candidates seeking work. This is a competitive area, I have seen several crowdfunding pitches in the last few months based on apps for the job placement market. James was seeking £150,000 and believed this would be the only round of investment required before he started making a profit in the back half of Year One – subject to reaching a minimal critical mass of 10,000 registered job seekers and 100 recruitment consultants. Five job agencies are currently trialling the technology. .James had pitched three months before and the panellists agreed his pitch was getting tighter and he was coming across as more confident.

Next up was Julian Tremaud, founder and CEO of Fanteamz.co. “86% of viewers skip TV ads” he declared, as a way to start explaining that he will provide organisations with an opportunity to hire teams of brand ambassadors to deliver positive word-of-mouth campaigns. He has Spanish partners and they already have successful case histories from South America, particularly in the music concert and festival sector. Julian is seeking £250,000 for 20% equity, and forecasts £21m profit by the end of Year Three.

The panel advised Julian to be better able to explain how the company valuation figure was reached. Another suggestion was try a round of donations crowdfunding before an equity deal.

Third pitch was from James Parker from Instaload. One third of all US truck mileage is with empty vehicles. Freight bookings go through expensive brokers, often at short notice that leaves the drivers stuck with no loads to pick up at their destination to then take on to somewhere else. The growers and manufacturers with goods to shift sometimes never meet or speak to the truckers who deliver their products. To address these factors, Instaload are developing an app that will provide a direct interface between the people with products that need transporting with the smaller truck companies that carry about 20% of the USA’s road freight. This 20% market share was valued at an estimated $114bn in 2014. James was seeking £50,000 to complete the app development in exchange for 10% equity.

The panel suggested it might be too difficult to raise the finance in the UK if it was going to be invested in the US. Investors would not have market knowledge to make a confident decision and generous UK tax breaks would not be available to them. There might also be heavy industry regulation that protected the brokers’ position. Later in the informal discussion it was suggested that potential investors might not believe it credible that they could get a 10% stake in a company targeting a $114bn market for just £50,000.

The final pitch of the evening was given by Borja Goyarrola, director of Gobe! Borja hopes Gobe! will become a travel/lifestyle app populated with content provided by users about their own personal favourite locations and places to go. The sharing of such local knowledge and tips would allow travellers and visitors to experience more of the living contemporary culture of a city rather than look at iconic monuments and exhibits that celebrate past achievements. Borja was a last minute addition to the roster and it was understandable he did not have a presentation available alongside his demo video.

Borja wanted £100,000 to finish developing the app and to pay for some digital and social media marketing. The panel suggested he should target some low-scale income from advertising before he pins his hopes too much on a big spending global advertiser such as Unilever stepping in to support the fledgling Gobe! I know from experience that fmcg giants and their advertising advisers can be rather conservative when faced with new marketing channels and opportunities.

Whilst equity crowdfunding is clearly about raising finance, research shows that more crowdfunding project creators have difficulties with marketing issues than anything else.

I have over 30 years’ experience in various results-focussed marketing roles and have concentrated on crowdfunding since 2014. I’m happy to meet for initial consultations free of charge. How things develop after that depends on the scale and scope of your aims and the extent of your marketing activity so far.

Clive Reffell, founder of Comanche Communications & Marketing and an independent crowdfunding adviser: E [email protected] and Mob 07788 784373.

Definite tech firm skew to live crowdfunding at StartUps2016

Posted on January 21, 2016May 10, 2017 by Clive Reffell

The ‘Show Me The Money Zone’ at the recent StartUps 2016 day for aspiring entrepreneurs saw five tech-based crowdfunding projects showcased to a panel of judges in front of a maximum capacity audience in KPMG’s Canary Wharf building.

The event was organised by IntelligentCrowd.TV and three of the five startup companies will be included in their weekly Seed & EIS Hour show going out at 19.00 on January 28.

The top class judging panel included (l to r):
DSC_1288_01

Modwenna Rees-Mogg, founder and CEO of Angel News – “The intelligent and relevant news service for investors and entrepreneurs”
Grant Calton, partner at Ironbridge Capital Partners. Grant has spent much of his career in the music and media industries as an entrepreneur and investor and is also an active investor in the media, tech and property sectors.
Jenny Tooth OBE, CEO of the UK Business Angels Association, the professional trade body for angel and early stage investing.
Damian Wasey, Head of Sector Partnerships, KPMG Small Business Accounting
Julia Groves, Chair of UK CrowdFunding Association and a director of Trillion Fund – a crowdfunding platform focussed on loans to renewable energy projects.

The five pitching companies seeking funding later this year each gave very professional presentations that summarised their business idea, outlined their development plans and aims, and explained what they intended doing with the funds they wanted to raise. They had to do this within a strict time limit and then field questions from the panel. The panellists assessed each pitch to decide on a final ‘winner’ on the day.

The winner was WorkMatch, a smartphone app creating a marketplace to connect vacancies in the hospitality industry with a somewhat itinerant group of informal workers. It allows employers to run background checks, hire, pay and review staff from their smart devices. Workers can access, screen and apply for hundreds of vacancies. CEO Matthew de la Hey and COO Alexander Hanson-Smith presented.

Close second was BackTracker. CEO Henry Latham and co-founder Geordie Palmer pitched their plan for an online social guide for backpackers. Backpackers have a different mindset and set of criteria to holidaymakers and this app enables them to find other people’s tips and to pass on their own.

In the order that they presented, the other three startups were:
FindEx, a currency exchange marketplace on a powerful mobile app that enables users to locate the most competitive currency exchange rates and provides FX retailers with a cloud-based platform on which they can encourage business. It was pitched by CEO Ricky Lee.

The Virtual Insight team of CTD Thomas Clayton and CEO Dr Cyril Godart presented their virtual reality means of learning to play the piano from a private tutor to a point of experiencing performing any one of hundreds of compositions to a ‘live audience’. The audience had been filmed listening to a maestro performing each piece of music to ensure genuine reactions and appreciation. In time this could be expanded to include other instruments.

Final pitch was Owlstand, an online exhibition and gallery platform for the display, sale and purchase of art. Art is currently displayed online the same way as products on supermarket shelves, said CEO Stephen Yang. When questioned, he admitted it was tricky to find sellers before there were any buyers and buyers without any sellers first committed to the site. His solution had the judges and the audience in fits of laughter: “Well, you just gotta fake it ‘til you make it.”

Panel laughing — The judging panel appreciated Stephen Yang’s candour: “you gotta fake it ’til you make it.”

The IntelligentCrowd.TV website show on January 28 will feature WorkMatch, Virtual Insight and Owlstand.

If you want independent crowdfunding advice to develop your own business idea from a dream to reality then contact me, Clive Reffell, at [email protected] or on 07788 784373. You can follow me on Twitter @Cliveref.

Plenty for crowdfunders at London’s ‘The Business Show 2015’

Posted on December 7, 2015 by Clive Reffell

The Business Show 2015 on December 3 and 4 in London provided great opportunities for aspiring crowdfunders to check out several aspects of what’s involved.

On the topic of business start-ups, Daniel Murray spoke about raising £2m to launch online fashion shop Grabble without previous fundraising experience, and some of the important lessons he learned along the way. Like no matter how clever he thought he’d been in his advertising job he quickly realised that he knew next to nothing about running a business, and that there was possibly something to learn from everyone he met. This included leaving every meeting with the name of at least one person who might be able to help him.

Also on the subject of start-ups, Nidhima Kohli, founder of online beauty products site My Beauty Matches, talked about how she built from nothing a community of 85,000 people. Big lessons from her also included the personal sacrifice necessary to build a successful business, which involved quitting her job, renting out her flat and moving back in with her parents. Nidhima also strongly recommended working with students hungry for work experience rather than burning money using agency advisers

Three different aspects of crowdfunding were represented at the show. Bill Morrow, CEO of Angels Den, explained that angel investors are often looking for fun reasons to get out of bed in the morning rather than focussing exclusively on their return on investment. Expect mentoring involvement from Angels Den investors, know how much money you need and what you are going to do with it so that you give a good pitch, and also show some good social skills when you pitch to them so that investors want to work with you on a personal basis.

A different ‘money only’ option is provided by the investment loan platform Funding Knight. Chief Exec Graham Marshall explained it matches multiple lenders – not investors – with borrowers. This means lenders are able to diversify their investment loan across numerous businesses, and they can also benefit from a secondary market to trade investments as they have fixed, known returns. And the people seeking investment can retain their equity.

In between these two alternatives is Crowdcube, the world’s largest equity crowdfunding platform with 52% of the UK market. Head of Equity James Chalk explained that earliest investors in equity crowdfund projects are often quite small-scale, though when enough of them have created momentum behind a crowdfund project it is not uncommon for serious high net worth individuals to then step in with significant investments in which they may want to take an active interest. 19% of Crowdcube’s registered investors earn over £200k p.a., and HNWIs have been responsible for 59% of all the money invested through Crowdcube since it started in 2011.

Other important issues for crowdfunders included protection of Intellectual Property through copyright, registration and use of trade marks. This is all very valid if you’re going to essentially post a business plan online for people to decide whether or not to invest in you and your idea.

There were further lessons for deciding on items to offer as crowdfunding perks from a branded merchandise supplier. Thank about what’s memorable and relevant, allows good quality at an affordable price, is going to be useful to people and will last long enough.

Acquiring contacts and driving enough of the right types of people to an online crowdfund project is the core basis of success or failure, and the most popular seminars were any that offered to explain how to put together an effective social media strategy. Relevant presenters included Kristian Downer of DowSocial.

Finally, it’s well known that anyone trying to put together and run a crowdfunding project on their own has the odds stacked against them. A team of people almost always gets better results. And Alastair Cook, captain of the England cricket team, made an appearance to draw some parallels between leading teams in business and in sport. When things get tough – and inevitably at some stage of crowdfunding they will – believe in yourself as a leader and dig-in rather than pack it in. And when your team is under pressure it’s vital that everyone keeps putting in their fair share of contribution, no ifs, no buts, no excuses or cop-outs.

This collection of issues to consider shows how complex putting together and running a crowdfunding project can be. If you think you could benefit from independent crowdfunding advice, whether for equity or donations-for-rewards crowdfunding, then please get in touch: [email protected].