Crowdfinders Live, a top all day crowdfunding conference

Over 400 people booked their place at Crowdfinders Live (#CFLive) held in London on 15 October 2015. A blend of personal and company investors, entrepreneurs seeking funding and crowdfund platform providers spent the day networking and hearing industry updates, panel discussions of topical issues and some live pitches from companies seeking equity funding. This is not a summary of the whole day, it’s selected items that resonated most with me personally.

Will Broome, a respected figure in the events and hospitality industry and creator of My tweet behind a panel sessionlondonlaunch.com in 2001, had the role of MC. In his first of several entertaining sessions at the microphone he reckoned that having a good idea made up about 1% of a successful crowdfund project – 99% being hard work! This was a comment I used in one of several tweets during the day (@Cliveref) which were shown on the big screen behind the speakers and panellists.

Nicola Horlick, CEO of Money&Co, a person-to-business lending platform, was the first speaker. Banks are generally still not lending to SMEs, in part due to recent rules on bank capital requirements to support their amounts on loan. So there is a demand for business loans and through its high net worth clients who are looking for good investment returns there is a source of funds available through Money&Co. There is the risk of business failures among start-ups, though the latest average gross annual yield for Money&Co investors is 9.1%. For those of us of more modest means, a new Innovative Finance ISA will allow individuals to invest up to £15,000 a year in loans to small businesses in a tax-free wrapper.

Next speaker was Christian Mouyesset, co-founder of Hummus Bros which raised £500,000 this year (against an initial target of £250,000) through equity platform Seedrs. He stressed the importance of pre-selling to guarantee some early funding to give a project momentum.  Whether it’s for equity or donations crowdfunding, empirical evidence shows that successful projects receive 30% of target within the first few days. This gives strong encouragement to others who may be thinking about investing or donating.

kiki LoizouKiki Loizou, Small Business Editor at The Sunday Times, chaired a panel session covering topical issues in equity crowdfunding. Sound-bites included:

  • A lingering unresolved issue is how new companies go about establishing a credible valuation figure – some are simply outrageous. Julia Groves, Chair of the UK CrowdFunding Association said investors should just reject those projects, so that the marketplace would cultivate responsible behaviour.
  • Case studies of failed projects as well as success stories should be examined to identify common reasons for failure to reach target. I tweeted whether doing this and making the results easily available should be within the remit of UKCFA?
  • There are people looking to invest more money than is required by current good opportunities.
  • To encourage continued growth, perhaps there ought to be case studies from an investor perspective as well from the companies that receive funding. Another UKCFA task?
  • Equity crowdfunding is maturing fast, though perhaps more should be done to educate potential small-scale investors about possible risks and the length of time they may have to wait to cash out their investments.

Second panel sessionIn a second panel session, Michael Wilkinson of CrowdCube repeatedly stressed how important it is for crowdfund project owners to understand the need for effective marketing to drive a big enough crowd of the right type of people to their project. This is a very good piece of advice that was also identified by business think tank Nesta as often being a bit of a problem, which I pointed out to conference delegates via Twitter.

The afternoon session showcased 15 minute pitches from seven fund-seekers.

Brabham pitchDavid Brabham, several times winner of the Le Mans 24 Hour Race and son of Formula One champion Sir Jack Brabham is using crowdfunding as part of his plans to revive one of the most famous names in international motor racing.

Kelvin MackenzieKelvin Mackenzie (right), formerly editor of The Sun and owner of talkSPORT radio station, is raising funds for his price comparison site A Spokesman Said. The site also champions the consumer rights of ‘little guys’ who believe they are being bullied or ignored by big companies.

Lauren RileyFormer TV Apprentice challenger and qualified lawyer Lauren Riley (left) wants £150,000 to develop TheLinkApp, a version of WhatsApp designed for the legal industry to improve both their profitability and their clients’ quality of experience.

Husband and wife team Rufus and Charlotte Pearl already have a thriving business selling their Pink Lining brand products to the Mother and Baby market.  In the UK they are stocked in 300 stores including Harrods. They are also stocked in Paris, New York and Tokyo, and are big in South Korea. They want to expand further. Strong social media networks are vital for crowdfunding success , and they have a customer database of over 100,000 people and 55,000 Facebook fans.

Roger Hatfield, Mayfair Brands LtdThe other pitches include a dog-sharing website called Borrow My Doggy, a UK based asset management company called Alquity which invests in sustainable ethical projects in Africa, and Mayfair Brands. Mayfair Brands has achieved national USA distribution for their high quality gin, vodka and rum produced in Clapham, London. Now they need investment to create the stock levels needed to soon meet the American orders.

Me with Luke `Ling. CEO of CrowdfindersAnd Mayfair Brands products were available in the post-event party where I got together with several other delegates, some of the speakers and panellists, and Luke Davis (pictured on the left), CEO of Crowdfinders who organised the event.

If you want to discuss your own thoughts or plans for crowdfunding with a specialist independent adviser then please send me an e-mail to [email protected] or call me on 07788 784373.

Crowdfunding’s role for worthy causes

Crowdfunding goes from strength to strength. And for social community projects and worthy causes, crowdfunding provides new and exciting opportunities for fundraisers to exceed previous levels of expectations, perhaps by up to three-fold.

Here’s how it works. Like most other disruptive changes to established ways of doing things, it is based on the internet. Crowdfunding delivers an innovative way to generate an investment budget to finance a business start-up, expand an existing organisation, or achieve a worthy aim in the community. The crowdfunding process makes your funding requirement public on a dedicated website platform, and you need to drive a big enough crowd of people to it and convince a high enough proportion of them to give just a little bit each towards what you need.

There are four broad types of crowdfunding. For businesses it includes money on loan with pre-set repayment terms, or in exchange for some company equity. For social community projects or worthy causes there are direct appeals for donations (with or without reward incentives) that do not incur any responsibility of repayment.

Donations campaigns are often built around a donations-for-rewards model. Donors not only feel a rosy glow from supporting a cause they empathise with, they are also encouraged to give by the range of perks and incentives offered in recognition of their support. This reduces the net income a crowdfunding project generates by the amount it costs to source and distribute the perks. Though if the perks include merchandise material that promotes the cause or the project then they can deliver valuable longer-term visibility. Perks may also include reduced rates to buy products or use a facility or venue, encouraging a level of habit-forming patronage.

Here is what makes crowdfunding particularly effective for worthy causes. The money raised through donations campaigns tends to come in three roughly equal parts. The first third is donations from your closest contacts and you need to personally secure their support. In the past this may often have been the extent of the fundraising for a particular cause or project. However, crowdfunding now provides effective leverage to use this income as a base upon which to achieve even more, perhaps double the initial amount again. Do the personal selling in time to refine an effective pitch for your important crowdfunding video.

The donations from the key personal contacts should appear quickly in your online crowdfunding project, certainly in the first few days because they will inspire and encourage other donors to follow them. The next third of donations are likely to come from other contacts in your e-mail database and various social media networks who are not close enough for you to have reasonably approached on a personal basis. It is thus vital to have an organised e-mail database and sufficiently sized social media networks for this to be viable, and some prepared content to quickly distribute. You may want to consider an e-mail automation programme. Independent crowdfunding advice on several of these issues could be very worthwhile.

The average UK crowdfunding donation is around £35, and – again on average – one in twenty people who visit an online crowdfunding project will make a donation. Depending on your target amount you can start doing the sums to estimate the size of crowd you need to drive to your crowdfunding project.

And finally, there are many, many people out there who are open to contributing to good causes. Up to a final third of your  income can come from people outside of your networks, people you have never been in touch with before, but who are encouraged by the quality of your project and reassured by the fact that so many people who do know you are prepared to contribute. It gives them confidence they are making the right decision. Traditional media coverage generated through PR and Twitter hashtagging can usefully extend awareness of your crowdfunding project beyond your known contacts. This needs to be put in hand perhaps months before your crowdfunding goes live. You can of course then add these new people to your database to maintain regular contact and develop a deeper relationship with them.

PrintClive Reffell established Comanche Communications & Marketing in 2014 to provide independent crowdfunding advice to SMEs. He brings a wide range of problem-solving experience from a 30-plus year career in results-focused marketing. His formal qualifications include post-graduate diplomas in direct and digital marketing from the IDM and business management from the Open University Business School.

W: www.comcomms.com. E: [email protected] M: 07788 784373. T: @Cliveref

A high octane evening of crowdfund investment opportunities

It had all the ingredients for a heady cocktail of modern-day wheeling and dealing. Nine entrepreneurs seeking equity or loan investments through crowdfunding. Each giving quickfire three minute pitches followed by a couple of questions from a Crowdcube convenor in front of an audience of around a hundred people. These were potential investors and some would-be entrepreneurs who had come along to get a flavour of the occasion before they go under the spotlight themselves. And it did not disappoint.

Early evening networking_01It was one of Crowdcube’s regular monthly events that allow registered investors and investment seekers to get together in person for some important discussions. The funding seekers were spread around a few tables in a meeting area, some with samples of their products. Potential investors and the simply curious began to appear after 6.30 pm.

Among the refreshments available was a Grind stand. Grind is a small group of espresso and cocktail bars that provide “beautiful spaces in London for eating, meeting and drinking. Their strong, bitter coffee cocktails with Icelandic vodka and Kahlua coffee liqueur were a new take on the classic Black Russian. They are seeking £750,000 through bonds that will pay 8% interest over four years.

Joe Inglis, QTSYIs Joe Inglis on to a winner with a website, Qtsy, aiming to become a favourite for pet owners? They can post photos of their own pets, and vote on others. Votes win points and points mean prizes. Joe is after £150,000 for 12.5% equity.

Doug Bernier, Lumo Clothing_01As a cyclist who has suffered from the actions of errant motorists (and an impatient passenger in a traffic jam) the Lumo Clothing proposition has strong appeal. Doug Bernier is targetting £200,000 investment for 14.29% equity in his company that produces washable bags and jackets for cyclists with built-in powerful LEDs to give added accident-avoiding visibility. This is clothing and accessories designed for the places you’re going to, not the archetypal cyclists’ bright coloured and skin-tight garb. You could wear it in Grind and feel at home.

It may seem unfair not to mention the other projects seeking funding but I want to give you a flavour of the evening, not a blow-by-blow account of the whole proceedings. Though here is a line up of the entrepreneurs using this democratic source of securing funds to achieve their business aspirations.

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Left to right: Doug Bernier, Lumo Clothing; Hasan Mustafa, Collar Club; David Abrahamovitch, Grind; Richard Berkeley, Linkz; Joe Inglis, Qtsy; Alex Holland, Brew; Mark Aspinall, Extremis Technology; Sokratis Papafloratos, Togethera.

Crowdcube does not allow questions from the crowd following the quickfire presentations. So you have to stay at the event and find the people you want to talk to. If you have any interest in raising money through crowdfunding, even if it’s on a donation basis rather than equity or loan, checkout how to attend on the Crowdcube website and get along to the next one. It will show you how high the professional bar is set to be a winner in this competitive arena. And if you want help or guidance with any aspects of crowdfunding, please contact me, [email protected].

 

Ten tips for anyone changing their career path

Last year’s Office of National Statistics figures revealed that just 53% of the UK’s working population are fulltime employees with a regular pay cheque. More and more of us are choosing, or being forced by circumstances, to adopt alternative ways of funding our existence. The outcome can range from worries over simply paying basic bills to affording an enviable, comfortable lifestyle.

I’ve learned that whether starting up in business as a small-scale entrepreneur of any age, or as a local provider of professional services, downscaling from a dazzling corporate career, or on the verge of what could be a great money-making venture, many of us all share the same feelings.

Much of my networking in the first few months of Comanche Communications & Marketing was at a local SME level. I met many people who are or have been in similar circumstances to myself, setting out in business as a sole trader and trying to carve out a modest niche among the opportunities available within the accessible business community.

Then I found myself networking in different company when I spent a day at the third annual Great British Workforce Revolution conference. These events are tailored around opportunities for former company directors to ‘go it alone’. This can mean starting a new business, investing in other people’s new businesses, or taking interim roles to guide companies unable to afford their experience and knowledge on an fulltime basis.

A forum of former ‘captains of industry’ made some useful comments about the attitudinal re-think needed when making a career transition that are worth sharing with anyone who takes responsibility for their own destiny. Many people using crowdfunding hope it’s going to make a significant impact on their lives, but are they really ready for some of the consequences?

The key ten points the panel made were these.

  1. It’s scary to be in a new place. Doing new things, outside of a comfort zone that may have previously been full of support, is scary.
  2. Most of your previous contacts become useless because they were part of that former comfort zone, that former life.
  3. It’s difficult to achieve a target daily pay rate, so do what comes up that looks like it would be good to be involved with.
  4. But don’t forget that time is your most precious asset, particularly if starting a new enterprise later in life.
  5. Reconsider the people who you know. Build connections among a new group of people who are going to be able to help you.
  6. Think about how to help them, not only how they could help you.
  7. You should remain curious and love learning. Which is now easier than it ever was with the range of material available through the internet.
  8. Add practice to your knowledge, by simply getting out there to start providing others with the benefits of your knowledge and skills. Even do it free for a local charity rather than keep them to yourself. This will help teach you how to best present that knowledge in a way that builds confidence.
  9. Confidence is what your new customers or investors will recognise and buy in to.
  10. Work with people you like, who respect you and pay you on time. Life’s too short to do otherwise.

The Panel, left to right below: Steve Gilroy, Chief Exec at Vistage International (UK), the world’s leading Chief Executive organisation and main sponsors of the conference; Stuart Lucas, a former global finance high-flyer and Founder and Co-CEO of Asset Match which allows shareholders in unlisted companies to freely offer their shares for sale; Peter Collier, Executive Director and Founder of TCWM Ltd, held senior positions in the financial services sector until 2012 when after voluntary redundancy he started a business by taking small consultancy assignments; Robin Hill, Founder and CEO at Ruffena Capital Ltd, previously had senior positions in technology and media businesses. “It’s better to be more in control in a smaller company than lost in a big one,” he said.

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If you’d like to explore crowdfunding as a way to help you change your career path and want some objective advice and support then please get in touch. Drop a line to me at [email protected].

Crowdfunding and its use by the English wine industry

English Wine Producers Trade Tasting, 11 May 2015

The English wine industry is facing several positive challenges, and some major players are turning to crowdfunding as a means to best take advantage of opportunities in a fast growing market.

The English Wine Producers annual tasting for the drinks trade and media took place on May 11 just off Parliament Square, Westminster. It is a major event for EWP directed at the wine trade prior to the English Wine Week consumer event, running this year May 23-31. I spoke with several industry leaders.

Some notable wine writers and reviewers were also present, including Oz Clarke and Jane MacQuitty, wine writer for The Times.

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Some quick background. 2014 was a bumper year for the English grape harvest, and production rose by over 40% to 6.3m bottles. Of which an estimated two-thirds are sparkling wines. Part of this growth is also because the amount of land under vines has doubled in the last seven years to around 2,000 hectares.

The largest English wine producer is Chapel Down in Kent. They reported record sales of £6.1m in 2014, and have recently secured a further 326 acres on long leases to plant more vineyards.

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Future plans are being financed with £3.95m raised against 14.1% equity through the Seedrs crowdfunding platform in three weeks last September. This made Chapel Down the first publicly listed company to use crowdfunding. They are also building a brewery, and preparing for a period of consolidation within the industry.

Frazer Thompson, CEO, told me one of the greatest benefits of crowdfunding was that he had acquired not only the money but nearly 1,500 brand advocates who will continually support Chapel Down, not only through future personal purchases but also gift purchases and relentless word-of-mouth support.

If you’d like further information and advice about using crowdfunding to generate an investment budget please contact me, [email protected]. Your plans don’t have to be as big as Chapel Down’s. For example, in the brewing business the Camden Town Brewery recently raised £2.7m. Yet the Hop Stuff Brewery in south east London launched after raising £58,000 through crowdfunding.

Favourable comparisons to Champagne helped English sparkling wine establish an early market position and a price point far removed from Prosecco and Cava. These days, some English producers are more keen for their products to stand on their own two feet. Simon Bladon, proprietor of Jenkyn Place in Hampshire, didn’t mince his words: “Why should I want my English sparkling wines compared to an inferior product?”


Brad Greatrix, NyetimberBrad Greatrix, winemaker at Nyetimber, at the top quality end of the English sparkling wine market, told me wine makers from Champagne are being brought in by several wineries to contribute and share their skills. “Chalky soil in southern England is very similar to the Champagne region, though they marvel at the better quality of the English grapes they are given to work with.”

He believes English sparkling wine producers also benefit from greater freedom to use grape varieties of their choice than their counterparts in Champagne.

Ian Kellet, Hambledon MD

Another producer using crowdfunding right now is Hambledon Vineyard, England’s oldest commercial vineyard (est 1952), in Hampshire. MD Ian Kellet worked in finance and the corporate food and drink industry before buying Hambledon. He has brought these  skills to bear with a crowdfund through CrowdBnk to raise a target of £2.75m through loans, rather than equity. Ian told me he saw no reason to part with any share of his company.

The minimum investment is £10,000 for a five year term. For a £10,000 investment after 5 years an investor will get their £10,000 principal back, plus a £4,000 lump sum, which is 8% interest per annum. They also receive 1/2 a case of Hambledon Classic cuvée every year and at the end of the term have the option to convert their principal into Hambledon shares at £2.20 per share and/or Hambledon wine.

At May 14, with 18 days to go, 20 investors have so far pledged £2,329,400, almost 85% of target.

A testament to the growing quality of English wines was the presentation of Sommelier Wine Awards 2015 to Gold Medal winners Wiston Wine Estate on the South Downs, and Sharpham Vineyard in Devon. These awards are internationally contested, and as well as being Gold Medal winners they received the added Critics Choice accolade as being particularly suitable for sale by the glass.

Wiston Wine Estate win award_01

Dermot Sugrue, left, and Harry Goring, right, winemaker and co-founder respectively of Wiston Wine Estate, receive the Critics Choice award for their Blanc de Blancs 2010.

It was certainly a very pleasant day for me to sample many of the splendid wines available at the tasting. My thanks to the EWP Marketing Team for allowing me to attend.

Picture-of-ClivePlease contact me for further information and advice about using crowdfunding to generate an investment budget, [email protected].

Crowdfunding London 2015 – brilliant one day conference

The Crowdfunding London (#CFLondon) conference on 23 April 2015 served up a feast of information and inspiration for over four hundred people in The Crystal building at Royal Victoria Dock, East London.

The diverse nature of attendees spanned the full range from significant investors and business leaders running some of the biggest crowdfunding websites to individuals with a somewhat vague idea of a start-up business they want to launch.

First speaker was Luke Lang, CMO and Co-Founder of Crowdcube. Crowdcube is the largest of the UK crowdfund companies that enables funds to be raised in exchange for company equity. Their growth is representative of the whole industry. In total, 230 organisations have used them to raise £80m since 2011, and the industry is growing so fast that projects hosted by Crowdcube have already raised £20m in 2015.

Whilst crowdfunding may have started largely with attempts to raise relatively small budgets to launch start-ups that banks or other traditional lenders would not go near, the biggest individual amount raised on Crowdcube is £3.7m. The average investment made is £2,500, and the largest individual investments have been £0.5m on two occasions.

Luke’s two key pieces of advice to anyone who wants to raise an investment budget through crowdfunding are:

  • Work extensively on your own network of personal and business contacts. If you can’t convince them you won’t convince anyone else. And get them to make their investment as soon as possible because early support and momentum attracts other investors who don’t already know you.
  • Don’t forget that it’s all about delivering returns to investors and treat them with respect.

Next up, an expert panel chaired by the Sunday Times Business Editor Kiki Loizou discussed factors that have contributed to crowdfunding’s spectacular rise in the UK.

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  • Banks are reluctant to lend to small businesses, particularly start-ups with no assets
  • The growth of a stronger UK ‘entrepreneur culture’, and thus a demand for business investment
  • Low returns for investors from traditional opportunities
  • A ‘light touch’ by the financial regulators
  • Ease of use and trust in e-commerce
  • The democratisation of two-way communications with big companies through social media
  • The rise of popular online ‘sharing’ businesses such as Airbnb and Uber

People want to use the internet to do more than post personal content and maintain contact with friends and family, make purchases and let companies know what they think of their products and service levels. They are now ready to be part of something more solid. And it’s easy to build an investment portfolio. After a few clicks anyone can say they are a shareholder in a brewery, an ecological project or whatever else they choose. Crowdfunding has democratised being an entrepreneur or an investor.

Nicola Horlick, the international investment adviser once described as “Superwoman” for her skills balancing global business responsibilities and family life, brought heavyweight gravitas to the afternoon sessions. Her own crowdfunding company is Money & Co though she pointed out her ‘crowd’ was not a large number of people. They are a select group of seriously high net worth individuals looking to make equally serious business investments (known as peer-to-peer lending).

Nicola HorlickTo the previous reasons for the popularity and success of crowdfunding she added:

  • Fees to meet with financial advisers have created a new type of independent investor
  • Medium size businesses are vital to the recovery of the national economy because they employ 50% of the UK workforce, and maybe this has influenced the ‘light touch’ of the financial regulators

Business celebrity Michelle Mone, founder of the Ultimo lingerie brand, gave a very personal account of her life from a 15-year-old unqualified school leaver to founding a global brand and receiving her OBE.

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It was all here. The battles won by her personal drive to overcome doubters and break through the constraints of other peoples’ limited expectations of her. Creating stunts to achieve £multi-million media coverage. Breaking in to the American market through sending samples to Hollywood film set wardrobes. Then being swindled by her American distributors who robbed her of 10 months’ stock and £1.4m. Yet never giving in, never accepting “No”.

It was inspiring and punctuated with spontaneous applause. Thank you, Michelle.

The final session of the day was a guest panel of speakers being honest enough to admit some mistakes they had made in a quick-fire round of How NOT To Do Crowdfunding. I have been helping a project I found already being run by the Steam Tug Brent Trust. Their aim is to raise funds to restore the last steam powered tug, called the Brent, which had worked in London’s Docks. My sincere thanks to them for allowing me to go on stage and share some points with the audience about what could have been done better.