Crowdfunding’s popular for food and drink brands and restaurants

Food and drink crowdfunding examples October 2023

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

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

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

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

Crowdfunding by Restaurants

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

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

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

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

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

Crowdfunding by food and drink startups

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

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

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

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

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

Considering crowdfunding?

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

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

Online shopping is hurting the high street, but new tech can also help bricks-and-mortar retailers

Many well-known retail brands have shut down in the past few years. We’re no longer dropping in to Maplins, Toys R Us, Oddbins, LK Bennet, Karen Millen, British Home Stores or Mothercare. And that’s just a fraction of the list.

Many others have already re-negotiated their rent costs, or are planning to do so, through CVAs (Company Voluntary Arrangements) to buy time to develop a new business plan that will cope with current pressures of reduced customer footfall, sales figures and profits that are largely held to be attributable to online shopping.

CVAs spread retailers’ challenges – ok, risks – to a wider community of corporate owners of retail space and their shareholders, such as British Land, Hammerson and the Intu Group. Those shareholders, indirectly, include millions of us through pension schemes and government investments. So when media headlines declare “the high street is dying” we ought to take note.

Though is it really dying, or is it a case of transforming to the new reality of a business landscape that now has to include a share of online shopping? Latest figures from the Office of National Statistics show 19% of all UK retailing is done online, and the figure is still growing.

Online shopping is hurting the high street, but new tech can help bricks-and-mortar retailers

It’s not the only factor that bricks-and-mortar retailers are having to deal with. The level of business being lost to online retailers is enough to tip many shop owners in to a danger zone, and other factors are under scrutiny. Many local council traffic and parking policies, for example, are based on deterring people from going to their local shops and high street, rather than encouraging them to make a visit.

Changes to the way independent retailers do business are clearly needed, though many people are instinctively resistant to change. Even those that do grasp the nettle, who are willing to change and face up to the costs of doing so, may not be able to work out the best options to choose. But they are on borrowed time if they just sit still.

At a recent “Future of the High Street” meeting organised by the non-profit Smiley Movement, Lucy Stainton of the Local Data Company confirmed a very healthy 64% of UK retail outlets are independently owned. When asked which types of retailer are most commonly going out of business she replied “The boring ones!”

Online shopping is hurting the high street, but new tech can help bricks-and-mortar retailers
L to R: Lucy Stainton, Local Data Company; Enedina Columbano, TRAID; Neil Duffy, Retail TRUST; Andrew Goodacre, British Independent Retailers Association; Robin Osterley, Charity Retail Association

Despite the fact that it’s new technology that has created the new challenges, there are many enterprising tech startups that can help physical retailers. Here are five of them.

Launched in 2014 by a husband and wife team who began their retail careers with a market stall, Down Your High Street enables local independent retailers to have an online presence in a digital marketplace. Shoppers can source out-of-the-ordinary products from 530 independent shops based all over the country, and also opt for a deferred payment plan if they wish through collaboration with the fintech payment platform Clearpay.

Dotty Directory provides advertising for small and medium size retailers on a number of websites that have a local focus on areas around the UK. In return, their details are passed on to service providers such as insurance companies who will try to sell to them.

MaybeTech offers courses on using social media for local retailers to raise their profile and attract more customers. Their platform uses AI (Artificial Intelligence) to help larger organisations listen and engage with their customers through social media, benchmark their results, and optimise the ROI of their activity.

LoLo (short for Local Loyalty) has started rolling out a mobile app that enables shoppers to benefit from using tokens that represent cash price reductions in local stores. It aims to increase customer loyalty to local independent shops.

The retailers can in turn use the tokens they accept to enjoy savings on goods and services they require for their business, and receive customer data feedback in order to improve future decision-making. The scheme is networked so that wherever tokens are earned they can be used with any other retailer or service provider that is signed up to LoLo.

Near Street is a search engine that shows the availability of items in nearby physical stores alongside the regular online options. Any stores that maintain online records of stock levels can participate. The system also helps product manufacturers and brand owners check where their goods are after they have been delivered to distribution centres.

To close, I should declare an interest, as I manage social media for LoLo.


Equity Crowdfunding and Venture Capital Working Together

Equity Crowdfunding and Venture Capital Working Together
Not so long ago it was still quite common to come across articles that tried to pitch VC investors and equity crowdfunding supporters and platforms against each other, as if every startup business entrepreneur faced a binary choice of which investment route to pursue. There are growing signs that the complementry rather than competitive nature of these sources of startup and scaleup business funding are beginning to be appreciated.

Many startup founders seek investment budgets that are beyond the resources of friends and family backers, yet are too small for VCs to normally bother getting out of bed for. And if a business is in its earliest days without a trading history or future sales orders, there’s precious little hope of securing a business loan, whether from a traditional source like a bank or from a peer-to-peer lender such as Funding Circle. So there is a true gap in the business investment market that equity crowdfunding occupies, at the same time as providing better returns for small-scale investors than they can get from high street deposit accounts or investment schemes.

It remains fair to say that equity crowdfunding is not yet a fully developed entity due to the small number of exits that have allowed investors to reap their rewards: the UK Crowdfunding Association’s website has just one solitary case study (though there have been more). Other business finance commentators harp on about the startups that still fail, sometimes within months of raising seven-figure sums through crowdfunding, as if crowdfunding ought to provide some mystical defence shield against business failure.

Despite these shortcomings, the rude health of hundreds, even thousands of startups around the world that have traded equity for an investment from a crowd of backers supports enough confidence for the practice to continue to grow and spread.

It has now reached a point where venture capital firms are not only taking notice but some also want to be involved. In the UK, for example, the startup support division – called G – of the global accountancy firm Grant Thornton works with the equity crowdfunding platform Crowdcube.

It is a symbiotic relationship: Crowdcube can offer its clients a longer business development path than just realising their earliest investment rounds, and Grant Thornton gains an entry point to build relationships with promising entrepreneurs before they are big enough to usually be worth their attention. G also offers to make introductions to some of its network of investors who have indicated they are open to the idea of making early seed-stage investments. Here is an example of this co-operation in practice.

GunnaEquity Crowdfunding and Venture Capital Working Together is a range of uniquely-flavoured, craft-made soft drinks which aims to disrupt the established carbonated drinks marketplace in a similar way that craft beer has. It retails at a competitive price for a product made with better quality ingredients, and contains less than 5% sugar to be part of a healthy lifestyle. In 2018 it was available in over 3,500 UK stores, sales were up 300% on the previous year, and their highly experienced founders wanted to raise funds to accelerate the growth rate.

Initial discussions with Grant Thronton indicated that £500,000 would be appropriate to build distribution through recruiting additional sales people and investing in trade marketing. Although this amount is below Grant Thornton’s minimum threshold, their growth finance team remained involved to get Gunna investment-ready to run equity crowdfunding via Crowdcube to raise the money.

Support from some cornerstone investors who wanted to get involved at the ground level, introduced by Grant Thronton, strongly reassured a crowd of smaller retail investors. The equity crowdfunding project generated £819,150 from a total of 245 backers. As Gunna grows it’s likely there will be a need for further, larger rounds of investment which will meet Grant Thornton’s VC-backing criteria. Gunna’s hoped-for exit strategy is acquisition by an international drinks company.

A less formalised example is that of a business founded in 2013 that recycles surplus fruit and vegetables to make traditional recipe relishes and chutneys, Rubies in the Rubble. They were able to gain investment backing from Mustard Seed, a VC fund that takes a principal investor role in world-class early-stage businesses that generate compelling financial and societal returns.  However, beyond accepting £160,000 from Mustard Seed, the founder of Rubies in the Rubble, Jenny Costa, used it as cornerstone funding to launch an equity crowdfunding project on the Seedrs platform.

A rule of thumb has evolved based on empirical evidence that successful crowdfunding projects ought to start with very early pledges of at least 30% of their financial target. This is achieved through personal pre-selling by the project leader and their team to guarantee – as far as possible – that their project starts with a bang and not a whimper. This creates momentum as it gives vital confidence to what are usually smaller retail investors who require some reassuring encouragement to take the plunge.

Equity Crowdfunding and Venture Capital Working TogetherRubies in the Rubble set a target raise of £300,000, in which Mustard Seed’s investment easily covered the 30% requirement. By 3 June 2019 the project on Seedrs has easily surpassed the initial target and wss overfunding at over £535,000.  The funds are to support the launch later in the year of a mainstream ketchup product and a vegan plant-based mayonnaise. The business aim is to capture 3% of the UK ketchup and mayo market by 2023, whilst continuing the fight against food wastage. A trade sale is the most likely exit strategy.

Please get in touch for further insights and support on how you could use crowdfunding to raise money to startup or scaleup your business, plus reap the benefit of numerous other advantages. I’m an independent crowdfunding advisor, not tied or affiliated to any particular platforms: [email protected]

UK-based Food Sharing App Targets $1 Trillion Annual Wastage

UK-based Food Sharing App Targets $1 Trillion Annual Wastage
Half the food wasted in the UK is thrown away at home. In total, a third of all the food produced in the world is wasted. It represents an annual value of $1 trillion and it’s one of our planet’s greatest problems. There are millions of people who don’t have enough, deforestation to create grazing and arable land afflicts ecosystems for farmers to produce too much, and animal methane gases contribute to global warming and climate change.

Co-founders Tessa Clarke and Saasha Celestial-One knew each other from their MBA studies at Stanford Business School where they became firm friends. They hatched an idea to start OLIO in 2015, an app to connect neighbours with each other and with local businesses so surplus food can be shared, not thrown away. This can be fresh or packaged food nearing its sell-by date in local stores, spare home-grown vegetables, bread from a local baker, or the groceries left in the fridge when people go away.

They launched the OLIO app in 2015 and now have almost 25,000 volunteers operating in over 50 countries. I met Tessa recently and she kindly agreed to share her story with me.

How did you first test for public support of your idea to engage the crowd in a breakthrough solution?

We carried out some market research using SurveyMonkey and we found that 1 in 3 people are “physically pained” about throwing away good food. We then set up a WhatsApp group with 12 people and found they were very enthusiastic about sharing food that would otherwise go to waste. From that we received incredibly valuable feedback and suggestions.

With the support of our first investor we built the MVP (minimal viable product) version of the app. And working like crazy, exactly 5 months after we’d incorporated the company (we were Mums on a mission with no time to spare!), we launched the app in the App Store on 9th July 2015, quickly followed by Google Play three weeks later. The very first version of the app was extremely basic, and could only be used in five postcodes in North London. But that didn’t matter, we were live and ready to bring food sharing to the world!

 

And what’s your growth been like since those early days?

We’re absolutely thrilled that we’ve now got 750,000 users plus 25,000 brand Ambassadors (volunteers) all over the world. And together they’ve shared over a million portions of food – which is the environmental equivalent of taking almost 3 million car miles off the road!

How do you cope with different food safety regulations on person-to-person food exchange in all these different countries?

Food safety and regulation is something we take very seriously. All the food redistribution undertaken by our “Food Waste Heroes” – who collect unsold food from local food businesses and share it via the app – is governed by an incredibly robust Food Safety Management System. And the neighbour-to-neighbour sharing is covered in our standard T&Cs.

You’ve already mentioned a “first investor.” What was it like, raising funding to be able to dedicate yourselves to OLIO and make it grow?

Our very first investor was Simpleweb, who are a development agency in Bristol, and they absolutely loved the problem we are trying to solve and so wanted to partner on it. That enabled us to get the first version of the app built. Since then we’ve raised three rounds of equity financing, and each one has been very different – our latest round was a $6m Series A round led by Octopus Ventures this summer. Fundraising is always challenging, but incredibly rewarding once completed. It’s been quite a sobering experience being a female-founded startup team – because only 2% of VC funding last year went to female founded startups.

How does OLIO make money?

OLIO generates revenues by charging businesses for the service we provide via our Food Waste Heroes Programme to enable them to have zero edible food waste stores. Businesses are increasingly recognising that it’s no longer acceptable to be throwing away perfectly good food – their customers don’t like it, and their employees don’t like it either.

Is there ever a clash between volunteers helping for free and the OLIO founders want to make money?

Our volunteers understand that OLIO needs to have a sustainable business model, and therefore generate revenues, to be able to continue to exist and have the incredible impact we’re having. So they’ve been some of our biggest supporters as we’ve started to monetise.

Your growth rate has been really impressive. What marketing have you used?

Our Ambassadors have definitely been at the heart of our growth. We’ve also had some amazing bursts of new users whenever we’re featured on television, or in the App Store. Press has been useful for reinforcing the brand and credibility although it doesn’t drive immediate downloads. In terms of paid advertising, Facebook and Google have been most effective.

What are your plans for the future?

We have an unashamedly bold ambition for the future – in 10 years’ time we want a billion people to be using OLIO. When we raised our Series A funding this summer, it enabled us to double the size of our team and so now we’re really accelerating our growth.

Thank you Tessa, your story is so inspiring.

If you would like sign up to OLIO and start sharing recyclable surplus food then please go to their website now to download the app.

Does Marketing need marketing to startups and SMEs?

Does Marketing need marketing to startups and SMEs?
At #IoTUKInvestorDay on July 17 I heard 10 tech startup entrepreneurs with a business related to The Internet Of Things pitching to raise in most cases hundreds of thousands of pounds. Several wanted to make a transformational step by setting up Sales & Marketing teams and start B2C marketing. Sounded like some scaleup work opportunities for nimble marketing professionals.

Does Marketing need marketing to startups and SMEs?

Although it’s hard to be certain in a quick-fire series of five minute pitches, a repeated inference to the potential investors in the audience seemed – to me – to be “we’ve done the hard yards getting this far with our invention/discovery/vision/app/idea, and now all we need to scaleup is [your] money to pay for some marketing, then sales will inevitably follow, and we’ll all be sharing the rewards.”

The marketing function with its complexities and uncertainties was mentioned almost as an afterthought, even though it would be the untested new element in the mix to take some of these companies on a transformational step to the next stage of their development. One speaker had indeed used up his allotted time without getting to what a large chunk of the money he was raising was going to be used for – so he settled for an almost dismissive “marketing and all that jazz.” This shows little regard for the skills and expertise required to organise and execute effectively an organisation’s marketing and contribute to achieving its overall business goals. It thus also underestimates a good marketer’s value to an organisation.

Should the marketing profession, perhaps through its representative bodies like The Marketing Society and IDM (Institute of Direct and Digital Marketing) market the business discipline of Marketing to the entrepreneurial, startup, SME sectors?

If you are an entrepreneur with a business you want to either startup or scaleup and would like to understand more about benefits and opportunities provided by reward, equity or debt crowdfunding then please get in touch, [email protected]. I am an independent crowdfunding adviser, not affiliated to any particular platforms. I have over 30 years of varied marketing experience and have specialised in crowdfunding for the last three – making me almost an industry veteran!

How to have more by owning less

How to have more by owning less

Mass digital connectivity and the personal tools that have enabled the sharing economy to flourish have created a climate of transformational change in which many business sectors have been disrupted almost beyond recognition.

Many retail brand names have virtually disappeared from urban high streets as book, record and camera shops are largely bygone relics of the age when shopping experiences were concentrated there. Renting videos and DVDs in person, going to a bank, saving up to buy a car and searching for affordable hotels to stay in are actions that are either obsolete or in decline now that we can go online to use LoveFilm, Netflix, Spotify, banking services, Uber, Airbnb and many other time saving, on-demand and improved value services that a myriad of entrepreneurs want to offer us.

Or if we are among the people with a spare room, attic space or a car parking space to rent out, or even largely unused clothes and furniture, then we can earn some money by offering them for hire to people we are matched up with online. A surplus of personal residential space (a big house!) and a wardrobe of designer label clothing are still regarded by many people as status symbols, helping them feel comfortably higher up Maslow’s hierarchy of needs. Now they are loaned out to strangers.

In crowdfunding – the ‘alternative finance’ area in which I operate as an independent crowdfunding adviser, mentor and personal trainer – those with sufficient disposable income are prepared to support startup businesses launched by people who in some cases they have never even met, either through ordering products that can be at still a prototype stage or for equity in a company they like the look of but which provides no guarantee of successfully providing a return on investment.

So it’s not just a case of technology and connectivity making it easier to behave the same way that we did before. There has been a well-documented and fundamental shift of attitudes towards more emphasis and value on what we can do with money that makes us feel good about ourselves, rather than primarily what we can buy and keep to ourselves to support and project our self-esteem.

Two news items I recently came across in the crowdsourcing/sharing economy heartland of cars and accommodation brought this home to me.

How to have more by owning lessUber commissioned some research among a sample of 2,000 Londoners. 34% of Londoners used an app to book a car in the last 12 months, rising to over 55% of 16-34 year olds. 22% of current car owners would consider giving up their vehicle if they could even more easily get a car on demand by app. 13% of adult Londoners under 30 don’t have a driving licence and have no intention of getting one. London may well not be typical of the whole UK, though the trends appear deeply entrenched among a population that is bigger than that of countries such as Austria, Denmark or Hungary.

While working for a client in the construction sector I read about planning permission approval for a 19-storey tower block in Stratford, London, the main venue for the 2012 Olympic Games. This would be a residential tower block with a difference. Personal space in the 250 units will be scaled down to a minimum that can still satisfy privacy and security issues, to the point of each unit having a “kitchenette” without some of the supposed essential white goods we rely on. The trade-off for limited personal space is that residents will have access to a comprehensive range of communal facilities that not so long ago were the lifestyle trappings of only the better-off. These include a gym, cinema, roof terrace, sauna and hot tubs, library and a food market. It will open late 2018 or early 2019 and rooms will start from £230 a week including utility bills, council tax, wifi, cleaning and gym access

I have spoken with people from several large property developers recently. Planning and building design trends include wider corridors to make it easier to more regularly bring furniture in and out depending on whether a multi-purpose spare room is going to need a hired bed for friends to stay over, or a borrowed table and chairs to invite guests to dinner. In response to recent public consultations, residential projects at planning stages are also often reducing the amount of car parking space to provide more provision for safe and secure storage of bicycles.

These signs of largely Millennial-influenced lifestyle changes may not be for everyone, though they are certainly more than passing fads. This includes using more money, perhaps through supporting crowdfunding projects, to feel good by helping others achieve a personal ambition rather than pursuing a blinkered path more restricted to the acquisition of personal possessions.

If you are one of the growing number of people who seek funding to transform a personal business ambition in to a satisfying reality, then please get in touch for a free initial discussion (in person in London or via Skype) on whether some form of crowdfunding could do the job for you: [email protected], an independent crowdfunding adviser.

Networking with crowdfunders in London (Part 2)

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).

  • Networking with crowdfunders in London (Part 2)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.

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

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 Epihigh 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.

Emily Mackay, CrowdsurferSo 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%.

Fanuel Dewever, Crowd AngelsWith 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?
Fr Frank Haydru of The VaticanThe 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 Smith, TrackRChristian 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, Chilango_01Eric 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

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.

DSC_1361An 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):

DSC_1378

  1. Peter Richards, a partner in Venture Pilot, which provides technology organisations with a scalable structure for growth;
  2. Amarjeet Hans, Director of Crystal Clear Business Consultants Ltd;
  3. Raimonda Junkanaite, an entrepreneur and early-stage business adviser who is setting up CrowdVelocity, a crowdfunding-for-donations platform;
  4. John Elsdon, Chairman of the management consultancy Allied Powers;
  5. 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.

DSC_1369.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.

DSC_1371Next 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.

DSC_1373Third 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.

DSC_1377The 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.

What crowdfund creators find difficultI 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.