independent crowdfunding adviser Archives - Page 2 of 2

“Best Funding Solutions For SMEs” – a conference in London in May 2016

Posted on June 13, 2016February 13, 2017 by Clive Reffell

This event in east London’s Mile End Road explored a comprehensive range of funding options available to SMEs, including equity and debt crowdfunding. I attended in my capacity as an independent crowdfunding adviser. Here is my summary of key points from the day in four sections:

A) An approximate, overall market background of funds secured by UK SMEs in 2015

B) The range of funding opportunities available to SMEs

C) Concerns for SMEs to be aware of when raising funds to grow

D) Insights on successful equity crowdfunding

A) Overall market background

Matt Adey of the British Business Bank presented an overview of the funding landscape, the trends and latest figures available on financing SMEs in the UK.

Many small and medium size business owners, particularly in early days, prefer to bootstrap their way through rather than commit themselves to any obligations to third party finance providers. The extent of using someone else’s money may be restricted to existing bank account overdraft facilities or credit cards – which are already in place and immediately usable click resources.

61% of SME owners that do go further use just one source of external finance and in most cases that is their bank. Bank lending to SMEs is recovering, said Matt Adey, despite the continuing groundswell of media comment to the contrary. What clouds the picture is that high street banks are cutting overdraft facilities, according to Bank of England figures, whilst at the same time making more funding available through loans.

Awareness of other sources of finance is growing, as shown by research conducted for British Business Bank. Almost half of UK SME owners were aware of crowdfunding as a source of finance when the research was carried out in October 2015.

B) The range of funding opportunities available

Asset-based lending
This is effectively peer-to-peer pawnbroking, securing short-term loans against assets provided as security, as explained by Richard Luxmore of Funding Secure. No business plan or cashflow projections required, just an asset the lender will keep if you don’t make the repayments.
Stock market flotation
Companies in the EU can be as large as up to 250 employees and a turnover of €50m and still be an SME. Nick Parker, FD of newly floated Yu Energy took delegates through his recent personal experience. Yu Energy floated on AIM in March 2016 based on a turnover of £3.9m the previous year.
Bank loan
The biggest source of SME funding and on the rise, explained by Ian Warren, Senior Lending Manager at NatWest Bank. Total bank lending is increasing, though to some people it doesn’t seem so because overdrafts for SMEs are being cut.
Peer-to-peer lending
This sector was represented by Jasper Ehrhardt, MD of Funding Knight, and Maria Samayoa, Production Manager at rebuildingsociety.com. SMEs generally have to show a minimum two year trading history.
Equity crowdfunding
This sector was represented by two platforms: Frank Webster, Campaigns Director at Seedrs and James Sore (pictured), Chief Investment Office at SyndicateRoom. They both stressed that crowdfunding is no easier way of raising money than any other method. The sector has brought opportunities back to the general public to make direct investments in businesses. It is highly regulated, though investors still have to take responsibility for their decisions and conduct due diligence.
European Union
Chris Farmakis, EC Funding Manager at GLE Group, explained that through the Enterprise Europe Network they can provide EU funding for “highly innovative SMEs with a clear commercial ambition and a potential for high growth and internationalisation.
Pension-led funding
Anthony Carty of Clifton Asset Management pointed out that corporate pension funds are mainly invested in equities, in companies. So why not invest your own pension in your own company? They verify that it makes sense, to the extent that just 1-in-5 applications are authorised. This process can take three months. If you make it, you can get the government benefits from putting money in your pension, and then put it to work for your business. “It’s like having your cake and eating it,” said Anthony.
Invoice discounting
Explained by Helen Mackenzie of Platform Black. You can get a high proportion of an invoice’s value very quickly rather than wait for however long it’s going to take to get paid the normal way. Obviously a business has to be trading to have some invoices, so it doesn’t help startups. Platform Black particularly want to work with businesses over two years old with a minimum £500,000 turnover.

C) Concerns to be aware of when seeking funds to grow

Your personal and business credit rating.
Martin Mitchell and Jamie Allan of Experian highlighted the importance of making your credit score attractive to investors. This included checking for unknown County Court Judgements against an individual or their business. Simple things like paying bills on time improves a credit score. Click here for further information on access to monthly or annual reports.
Intellectual property protection and ownership.
Seeking investment involves telling your secrets, advised Clive Halperin of GSC Solicitors. Make sure what you tell people can’t be copied or stolen. There are trademarks, copyrights, patents and design rights. Make sure you understand the differences and use the most relevant one(s). Also, investors will not be keen if the business does not own its own IP. So don’t try to be clever and own it separately somewhere else.
Shareholders agreements.
This was also covered by Clive Halperin of GSC Solicitors. Shareholder agreements have to look to the future, not just reflect the present. Give yourself room to manoeuvre if a business partner stops pulling their weight. Allow for death, incapacity and for simply wanting to do something else instead. Consider all circumstances of share transfers, issuing new shares, restrictive covenants, deadlock resolution procedures, and more.
And as Bill Morrow, CEO of Angels Den later added: “If you sign anything [i.e. a shareholders’ agreement] and you don’t know what the likes of ‘tag and drag clauses’ are then you will not survive.” Don’t totally rely on advisers, make sure you actually understand it all.
Secure EIS and SEIS tax advantages for investors.
Founder and CEO of P2P lender Startup Funding Club, Stephen Page, explained the value of these tax break schemes for investors. Business seeking investment should be ready in advance, particularly if the end of the tax year is looming.

D) Insights on successful equity crowdfunding

It requires and dedication time to identify, locate and get in front of enough potential investors to find the one(s) who will back your business.
Frank Webster, Campaigns Director at Seedrs (pictured) said: “To raise money, get out there and talk about it [your business]. To potential investors there is nothing special about your business. They’ve heard it all before. So share it.” Or as Paul Grant of The Funding Game put it: “You’ve got to kiss a lot of frogs to find a prince.” He reckoned that on average it takes 50 approaches to find an investor.
Share your idea, don’t hold back, and don’t expect people to sign an NDA before you tell them about your business idea.
To reinforce what Frank Webster of Seedrs said, Stephen Page, founder and CEO of Startup Funding Club said: “I’m not going to sign over a thousand NDAs a year. I know what we talk about is confidential. Investors aren’t going to steal ideas, it’s not what they do.”
When you do find a potential investor who shows interest, don’t rush things.
Don’t immediately give a potential backer too much information. No one is going to stop what he or she is doing to read your 25-page business plan e-mail attachment on the strength of a brief conversation you had the previous day. “Investors have to be wooed,” claimed Roderick Beer of the UK Business Angels Association. “Don’t ask to marry them on the first date,” advised Paul Grant (in picture). Personally, I’d say don’t make yourself sound desperate as it can put people off.
You need a team
Investors will be wary of a one-man band, no matter how much of a genius you think you are. All the people from Seedrs, SyndicateRoom, Angels Den, Funding Knight, Invesdor and Startup Funding Club supported this point.
Don’t rely on your Business Plan
Investors will want to know you have prepared one, but as to how accurate a plan for a startup can ever be is acknowledged as a mystery. What’s more important, said Stephen Page of Startup Funding Club (pictured), is knowing what your cash flow is going to be like, and how long it will be before you need to raise more funds. And as the person who has had the great idea for your business, if you can’t write your own business plan you will be dead in the water, said Bill Morrow of Angels Den.
A mentor can be more important than money.
Money can be raised later, because maybe what’s needed first is a mentor with experience and contacts in the business sector you want to operate in. Jonathan Pfahl, Founder of Rockstar Hub International said they can effect introductions, and Bill Morrow of Angels Den said they even train their investors on to how to be better mentors. That’s why, he claimed, 94% of the companies that have raised funds through Angels Den remain trading.

If you are considering a crowdfunding project, whether equity or donations-for-rewards, I am an independent crowdfunding adviser with a marketing rather than a financial background. Please contact me about anything to do with identifying and building your own crowd of backers, and underpinning your crowdfunding project with an effective marketing campaign to get noticed and deliver results.

Clive Reffell, Comanche Communications and Marketing

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.