With more and more entrepreneurs turning to crowdfunding to access key capital for their early growth, Marca Me got in touch with funded Seedrs startups to find out the secret behind a successful crowdfunding campaign. Some of their findings were too good not to share, so we’ve copied their blog article, below.
How did you find the Seedrs experience?
Founder, Shaffique Prabatani at Storemates.co.uk said: “Very smooth and extremely profitable! After meeting the CEO, Jeff Lynn, who explained the process, we had a listing on the site within a week and had raised our full amount within 6 days. It was pretty amazing to get such a strong endorsement from over 40 investors who loved the idea of Storemates.”
The experience was shared by Swogo co-founder Lucy Foster who explained: “Seedrs was an incredible platform for us.” Swogo have now had three successful rounds on Seedrs.
Do you have any tips to other startups when raising finance through crowdfunding?
Pixel Pin co-founder Geoff Anderson suggests to keep it simple, which he explained to startups.co.uk: “It’s important to write the pitch in a clear and understandable way. Although our technology is simple to understand (to us), we use a disruptive technology that replaces passwords with pictures, it’s too easy to fall into using industry jargon and you need to remember that you’re pitching to a crowd. “
Shaffique offered his own advice for budding entrepreneurs: “Be transparent, honest and upfront. Investors realise that you’re at the earliest stage of investment and are therefore not going to give you the ‘Dragons Den’ treatment and expect you to already be making big bucks. They know that investing in startups is extremely high risk and so want to know that despite all this, you are realistic about what can be achieved. So do not exaggerate or give a hollow sales spin or brag about impossible goals – they can see straight through that. Be confident about your business and transparent about both the opportunities and challenges you face to achieve success. The Q&A section is the best place to do this.”
Lucy has some pragmatic advice of her own: “Firstly don’t raise too much capital at first. Instead, it’s often best to raise just enough to get you to the next stage such as the right amount to build your MVP. This makes it much easier to close an early round. You can always return to the table at a later date to raise further funding, and that way you’ll be able to retain more equity for your capital.”
“Second don’t forget to network offline. Many startups on crowdfunding platforms ignore traditional methods of raising investment, such as networking events. However these are a great way to get interest in your startup, and that initial push of investment.”
Bryan Crotaz from Silver Curve had some ideas on getting early momentum and suggested: “Get everyone in your family to put something in £10-100 would be enough. Do the same with all your friends. Try and get 50 investors that way in your first week.”
How long does it take?
Silver Curve has the record amount raised at Seedrs, but it wasn’t all rosy: “Things went very slowly until we got to about 60%. We tracked how much we needed on a daily basis to hit the target, and how much we were getting. These two numbers stayed aligned until the 60% mark, at which point the input number accelerated away. We were running at about £2,000 required per day for the first few weeks, and we were looking for that number (remaining cash divided by days remaining) to be steadily downward trending. In week 6 we did £12,000 on the Monday and another £8,000 in the rest of the week (Tuesday and Sunday are very quiet). Week 7 was crazy – we got about £60,000 that week, leaving £18,000. We closed from £15,000 remaining to £0 in about 3 hours.”
What have you been up to since you raised the money?
Swogo have been very busy since their investment explained Lucy: “We’ve had an amazing year since we first raised investment. We built our MVP which provided laptop recommendations for UK visitors. In just 4 months, we made around 25,000 recommendations, and 1 in 4 of our customers clicked through to the retailer.”
“In February 2013, we were the youngest team selected to join this year’s Startupbootcamp Amsterdam Europe’s leading accelerator for startups. In the Netherlands we gained a lot of interest from online retailers, and quickly pivoted to a B2B business model. Now we white label our technology to e-commerce retailers. In just 8 weeks, we closed deals with three of the biggest Dutch online retailers. Since then, we have continued to expand across the Netherlands and the UK. Since last summer we have increased our valuation ten times, and raised over £300,000.”
Why do you think you were so successful when raising your money?
Swogo: “I believe we were successful because we learnt quickly. At first, we went onto the platform asking for too much money. We found it hard to gain traction, and so quickly took it down and re-evaluated our priorities. We established exactly what we wanted to achieve with this investment, and raised just what we needed to do that. At a smaller round we found it easier to gain traction. This had also given us time to drum up interest offline, which created the initial push to pull the crowd in.”
Pixel Pin: “We could back up our pitch with a strong business case.”
Storesmates: “We just kept things simple – ‘the Ebay of storage’. Were honest and transparent and came across as investable as individuals thereby instilling a degree of confidence in our potential investors.”
Marca Me themselves are currently seeking investment through Seedrs.