“What attracted us to crowdfunding was not just the financial support, we thought it would be a great way to test the desirability of our newest product.” says Kellie Forbes Co-Founder of YUU World

Kellie Forbes and Gill Hayward, Co-Founders of YUU World, know what it takes to raise investment. They survived “Dragon’s Den” (TV programme) receiving offers from all five dragons and going on to raise investment from Peter Jones and Deborah Meadon. Then, in 2016, they raised £210,000 from a number of business angels. In 2017, with the business doing well and a new product to launch, Kellie and Gill turned to crowdfunding to raise investment to launch the product but, more importantly, to test demand for their latest creation, YUUGo a GPS tracker backpack which provides parents with everything they need to keep their kids both entertained & safe on-the-go.

Mid-way through their crowdfunding campaign, Hatty Fawcett caught up with Kellie asking her what appealed about crowdfunding, how the campaign was progressing and what they’d learnt in the process.


Hatty: What attracted you to crowdfunding for this investment raise?

Kellie: We were attracted to crowdfunding to launch our new product not just because of the financial support, but because we thought it would be a great way to test the desirability of our newest product. We also wanted to gain some valuable insight on how to improve our product along the way.

Hatty: What influenced your decision to do reward-based crowdfunding (rather than equity)?

Kellie: YUUGo is a tech product (it uses GPS/Wi-fi tracker to allow children to track their journeys whilst giving parents the ability to see where their kids are). We noticed that “wearable tech” performs particular well on reward-based crowdfunding platforms. It seemed a good way to reach out to new customers beyond those who already love our core product. Nothing is certain in crowdfunding – and we had some concerns – but we wanted to give it a try.

Hatty: How did you decide at what level to set your crowdfunding target?

“I would urge anyone considering crowdfunding to think very carefully about their crowdfunding target…setting this at the right level is more complex than you might think.”

Kellie: I would urge anyone considering crowdfunding to think very carefully about their crowdfunding target (the amount of money you want to raise).

We reviewed a lot of crowdfunding projects before launching our own and, in many cases we saw the percentage reached outshining the actual target. When this happens “the crowd” tends to be encouraged by the initial response and join in backing the project causing an overfunding situation. This is very exciting when it happens but it can also be misleading. You have to deliver your promised rewards the minute you hit your (minimum) target, even if you are planning to go on and over fund. We pondered setting a lower target (so that we were seen to achieve our target quickly) but we were concerned that if we set our minimum target too low we would not raise sufficient funds to meet our minimum order quantity with our factory, leaving us needing to deliver rewards without the minimum order quantity economies of scale. I guess what I’m saying is that setting your crowdfunding target is more complex than you might think. You’ve got to think about what you need, the costs of delivering your promised rewards and recognise that there is human psychology at play too.

“It is dependent on you to get the first 40-50% (of your target) pledges in – and you need these pledged in the first few days of your campaign. I cannot stress this enough”

Hatty: Had you lined up some initial investors to support your crowdfunding pitch when it went live?

Kellie: I cannot stress enough how important it is to do some in-depth prep and ground work on lining up initial investor pledges. I’d recommend lining up initial pledges that account for 40%-50% of your target – and you need these pledged in the first few days of your campaign to get the traction your campaign will need to reach “the crowd” (people you don’t know).

We’ve found there is a difference between American and UK consumer behaviour on crowdfunding sites. We found that our campaign received good numbers of visitors but the conversion from our Facebook advertising and our database was not what we had anticipated. People can be scared off, or simply be confused about what they are there for, if they have not made a crowdfunding pledge before. I’d recommend providing a clear, short explanation on your pitch page explaining how crowdfunding works. UK consumers, in particular, seem less familiar with crowdfunding compared to, say, the USA.

“I wish we had worked with somebody independent to our campaign and company so that we had another perspective and view.”

Lastly, and I feel this sincerely, I wish we had worked with somebody independent to our campaign and company so that we had another perspective and view on how to approach our campaign. In my experience, you cannot cover enough angles when preparing for your campaign!

Hatty: Have there been any surprising outcomes from your crowdfunding campaign?

Kellie: Yes! We were not clear enough on how much the first 30% (of your target) depends on you to get the pledges in. The first two days of the campaign were exhausting, asking friends and family to pledge. If only we had understood the importance of this better, and had prepared more pledges before going live.

That said, we’ve had amazing comments about our product. That’s been insightful. We know we have a desired product, but this has not translated into pledges. We thought that the pledges would be indicative of the product’s desirability – but this has not been the case.

We are currently (at the time of writing) mid-campaign and have reached 37%. We’ve had some lovely PR which has been brilliant (including a spot on BBC Business Breakfast) but, without faster progress towards our target early in our campaign, the exposure Indiegogo and Crowdreach can offer is limited. It reinforces how important it is to have lined up pledges which amount to a significant chunk of your crowdfunding target before you put the campaign live.

We are disappointed but we are not giving up yet. We have some plans in play to boost our campaign. Whatever happens, our product has been very positively received so maybe we just need to launch in the old fashioned way!

You can back YUUWorld’s crowdfunding campaign here

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Crowdfunding Accelerator is an eight week online programme that makes it quicker and easier to be successful at crowdfunding. Find out more

“Crowdfunding enabled us to turn a shared vision into a tangible financial commitment” says Robert Woodford, Marketing Director for Deep Time Walk

Schumacher College in Dartington, South Devon seeks to inspire, challenge and question people as co-inhabitants of the world. They are an international centre for nature-based education, personal transformation and collective action. They offer a range of residential courses on ecological themes and transformative courses for sustainable living.

A number of co-creators from the college developed the Deep Time Walk App which provides a walking audio history of the living Earth, giving people a detailed and dramatised experience of the planet’s 4.6 billion year history.  During this educational walk, people walk a distance of 4.6 kilometres whilst listening to the Earth’s story (via the app) and are encouraged to connect their own short-lived experience of time on Earth with the vast expanse of geological time.

The college needed funds to complete development of the app and with revenue generated from the sale of the app hopes to raise sufficient investment to fund a number of bursaries for the college. On World Earth Day in April 2016 they set out to raise £21,000 on reward-based crowdfunding site, Crowdfunder.co.uk.

robert-woodford-from-vision-to-financial-commitment-websiteHatty Fawcett, experienced crowdfunder and Founder of Focused For Business and Crowdfunding Accelerator, asked Robert Woodford to share what he learnt from this crowdfunding campaign and to offer advice to others thinking about doing crowdfunding.

“Schumacher College has a strong alumni who share the Deep Time Walk ethos and vision for the world…it was a project born out of the work of the college and it was natural for us to reach out to this pre-existing community for support”

Hatty: What attracted you to crowdfunding?

Robert: Schumacher College has a strong alumni who share our ethos and vision for the world. Many of our alumni had undertaken the physical Deep Time Walk at the College (from which this project arose) and so had a strong affinity for the project. It was natural for us to want to talk to this pre-existing “crowd” (via a mailing list of 17,000 people) and share our vision. Crowdfunding enabled us to turn a shared vision into a tangible financial commitment of support for our project.

“It proved crucial to have advice upfront …we would have missed out if we hadn’t had all the elements of the campaign lined up well in advance.”

Hatty: How did you approach your crowdfunding campaign?

Robert: We did a wide review of best practices associated with crowdfunding and spoke to a number of people that had already managed a campaign, including yourself Hatty – your advice helped us think about the common pitfalls involved in the process of crowdfunding. The team at Crowdfunder were also a great help in providing support and advice both before and during the campaign. It proved crucial to have this information and advice upfront because, once live, the campaign moved very fast and we would have missed out if we hadn’t had all the elements of the campaign lined up well in advance.

I have to say, it was tough work and enduring attention to detail was needed in the weeks up to launch and then constantly throughout the campaign. Gruelling but rewarding!

“Crowdfunding takes longer than you might think. It’s gruelling but rewarding!”

Hatty: How long did it take to prepare your crowdfunding campaign?

Robert: We starting thinking about our campaign six months before we went live, and then planning started in earnest three months before. Crowdfunding takes longer than you might think. We’d expected to launch about a month before we actually did. It was the right decision to delay the launch as it meant we had everything lined up and, importantly, we secured upfront financial commitments which ensured the campaign was a success.

“The biggest challenge was getting the timing of these pre-pledges lined up with the actual day our crowdfunding campaign went live.”

Hatty: How much of your campaign target had you had promised by the time you put your crowdfunding campaign live?

Robert: We had about 20% ready to be pledged before we went live. The biggest challenge was getting the timing of these pre-pledges lined up with the actual day our crowdfunding campaign went live, and then timing the push out to the wider support base after this.

“One thing that worked really well for us was having incentives that were, effectively, limited edition.”

Hatty: What advice, tips or successful tactics would you offer to anyone preparing for crowdfunding?

Robert: Planning is essential – I can’t stress that enough– as is keeping the momentum going throughout the campaign.

One thing that worked really well for us was having incentives that were, effectively, limited edition. The rewards were also of high value to our target base for support. We made exclusive audio recordings with Satish Kumar, Martin Shaw and Stephan Harding, and provided an set of lectures which totalled over 4 hours. We also have put in the effort to produce an exclusive book and audio cd, which was attractive to potential supporters. And, we would only release a certain number for each reward category and when these were taken, that was it, they were gone. This encouraged people that visited our crowdfunding campaign to pledge, there an then, whilst they were on the site. If they’d waited the reward might have run out.

We used several tactics here:

1) We kept the number of each reward low so that people were encouraged to pledge before a reward ran out.

2) We offered an incentive that the first 50 people that pledged would receive access to an early version of the product, which really helped bring in the early pledges.

3) Half way through the campaign, we launched a match-fund campaign, which brought in a substantial mid-boost to our crowdfunding campaign. It worked so well it enabled us to add stretch targets which provided further momentum to the project.

“We launched a match-fund campaign…and what started as a £1,000 commitment became an £8,000 investment.”

Hatty: How did the match-fund incentive work?

Robert: Essentially, I got three donors in place who each promised to contribute a relatively large sum if we raised matching funding through the crowdfunding site. It was difficult getting the first major donor but, once we had one on board, it was easier to encourage others. The first donor offered a commitment of £1,000 if we could match it through the crowdfunding site. I then got a commitment of a further £3,000 from another two donors. This created a theoretical match-fund pot of £4,000. All we had to do was raise the same amount of money through our “crowd” and that would trigger the match-fund investment. Our wonderful “crowd” came up with the goods on the same day we told them of the initiative! So, what started as a £1,000 commitment became an £8,000 investment. In fact, we actually went over the target amount before the match-fund was pledged and so we pushed on to reach towards our stretch target. Originally we’d hoped to raise £21,000 but we actually raised over £26,000.

Match-funding really incentivised our crowd and our match-funders were excited by it too. They felt they were doing something special which boosted support generally.

“We’re no longer a team of eight, but a community of 267 with a common passion and commitment to the project”

 Hatty: Would you do crowdfunding again?

 Robert: Yes, it’s an exhilarating if sometimes stressful ride, and it was wonderful to be part of a project that not only delivered the investment, but also has the potential to change people’s perspective on their place in the cosmos and how Earth formed over 4.6bn years.

Perhaps even more importantly, we’ve created a growing community around this project. And that’s more compelling than the app on its own. We’re no longer a team of eight, but a community of 267 with a common passion and commitment to the project and it’s potential to give anyone, anywhere on the planet a perspective of deep time and where they came from”. If we nurture this relationship there are lots of opportunities down the line to do other things.  Now, that’s exciting!

To find out more about the Deep Time Walk, visit deeptimewalk.org or join them on their facebook page at www.facebook.com/deeptimewalk

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Crowdfunding Accelerator is an eight week online programme that makes it quicker and easier to be successful at crowdfunding. Find out more

Crowdfunding Success: “Momentum is the key to crowdfunding success” says Peter Ramsey, founder of Movem

Movem, the online community marketplace for landlords, agencies and tenants to list and review rental properties, raised £200,000 on crowdfunding site Crowdcube in just ten days (in August 2016). The investment allows Movem to expand into the residential lettings market, growing the business significantly.

Picture of Hatty Fawcett

Peter Ramsey, Founder of Movem

 

 

 

 

 

 

Hatty Fawcett, experienced crowdfunder and Founder of Focused For Business and Crowdfunding Accelerator, asked Peter to reflect on the process of crowdfunding and share his learnings.

“I loved the idea of having emotionally and financially invested brand advocates.”

Hatty: What appealed to you about crowdfunding?

Peter: I loved the idea of having 100+ brand advocates who are emotionally and financially invested in our product.

Hatty: Did you consider any other forms of investment?

Peter: We considered raising funds privately, including business angel investment. However, I felt Movem needed to make a mark on the industry – which is exactly what crowdfunding helped us to do.

“Crowdfunding isn’t easy – you’ve got to create momentum but that requires hard work.”

Hatty: How easy did you find the process of preparing for crowdfunding?

Peter: Developing a crowdfunding campaign took a lot of time. It probably took me 2 months from making the decision to do crowdfunding to going live. The hardest thing for me was the video pitch. I knew it had to be good, but I didn’t know anybody that could help me make one. So I did it myself. I rented camera gear, got a tripod and filmed/edited the whole thing on my own.

I wasn’t actually that happy with the final cut, but I couldn’t get any more footage, so I had to put up with what I had. On the positive side, that did stop me re-filming again and again. The guys at Crowdcube were very supportive too.

Hatty: If someone is considering crowdfunding, what advice would you offer them?

Peter: My biggest piece of advice is you need to recognise that crowdfunding isn’t easy. There’s a lot of work and effort that goes on behind the scenes. For example, I’d raised some of our investment target prior to putting our crowdfunding campaign live. That was hard work and took time, but it was really important in creating momentum for our crowdfunding campaign when it did go live. That’s the key really, demonstrating momentum.

“I’d wake up at 7am every day and spend the whole day contacting as many people as I could. Literally until I went to bed!”

Peter: Even once you’ve gone live you have to keep that momentum going. You have to keep talking to everyone you think might be an investor. I’d wake up at 7am every day and spend the whole day contacting as many people as I could. Literally until I went to bed! I used everything available to me. LinkedIn, email contacts, the press, friends of friends, Facebook adverts…you name it. I tried it. Crowdfunding is a numbers game – and that requires persistence and hard work.

Hatty: What percentage of your crowdfunding target had you raised before you put your crowdfunding campaign live?

Peter: I had raised £85,000 so just over 40% of our target.

Hatty: Is there anything you would do differently, knowing what you know about crowdfunding now?

Peter: I’d probably be a bit more ambitious. I spoke to so many people during the course of our crowdfunding campaign, there was a ground swell of support and momentum. So many people got in touch afterwards that we could have easily funded £500k.

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Crowdfunding Accelerator is an eight week online programme that makes it quicker and easier to be successful at crowdfunding. Find out more

What’s in a good investment pitch?

When raising investment for your small business, you have to be ready to pitch at any moment. Anyone you meet could be an investor. It could be the person standing next to you on the bus, someone you meet at a networking event or party or even someone you play sport with in your spare time.

Depending on the circumstances you may not have long to pitch. In some cases you might only have a minute to get your business across (the classic “elevator pitch” scenario), whilst in a more formal pitch environment (such as at an angel network pitch evening) you might have 15 or 20 minutes. Certainly, you won’t always have a Powerpoint presentation. You have to be ready for any eventuality.

So what should be in your business pitch?

A good place to start is with the business concept. What is it your business does? What problem are you solving for your customers? Even in a 20 minute pitch you don’t have long (and there are other things you need to talk about in addition to your products and services) so keep your explanation short and to the point. Focus on the key points and what makes your product/service different. If you are talking about your product/service for more than 25% of the length of your pitch than you are probably going into too much detail.

Next up, talk about sales. What’s your business model and how do you generate revenue? Investors love to hear that you have more than one revenue stream and that you have experimented with different routes to market and identified the most successful channels. Ideally you are looking to show that you’ve hit upon a selling formula that delivers predictable results and is ready to be scaled up.

Businesses don’t make themselves. It is people who make businesses successful. You must introduce yourself and your team in your pitch. You’ll want to talk about the team’s background, skills and experience. Leave the investor in no doubt that you have the right mix of people to drive this business forward.

Your team should start to build your credibility in the eyes of an investor but you want to cement this by talking about your business achievements to date. Highlight any key milestones you have achieved: Key strategic partnerships you have formed, contracts you have won and revenues in the bank. Your pitch needs to demonstrate that you are already delivering results, even without the investment.

No pitch is complete without some numbers. If you are already revenue generating share what monies you have banked. Forecast future revenues (realistically – no one will believe “pie in the sky” numbers) and be clear about your margin and breakeven. Be specific about how the money you raise will be used, and provide revenue and profit predictions for the point at which you plan to exit the business. You must have an exit plan. Investors will want their money back at some point. Without an exit they don’t get a return!

Finally, be clear about how much equity you are selling in return for the investment. An unrealistic valuation can ruin an otherwise brilliant pitch. For advice on valuing your business, download my e-book.

Given you need to be ready to pitch at the drop of a hat, and that you can’t always rely on a Powerpoint presentation to help you remember everything you want to get across, you might find it helpful to have this little mnemonic in your mind to make sure you cover the main points. It’s based around the middle letters of the alphabet:

Image showing what's in a good pitch
Oh, and one final thing, be sure to pitch with passion! If you’re not excited by your business why should an investor get excited? Pitch with energy and enthusiasm and remember to smile and make eye contact.

Good luck!

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If you would like help in developing your investment pitch, contact me , Hatty Fawcett, to book a phone call.

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What is Crowdfunding?

Everyone is talking about crowdfunding these days. Not surprising really. It’s not just a hot topic but a very useful tool too. In 2015 some 300,000 businesses raised £3 billion through alternative finance or crowdfunding (Source: Pushing Boundaries: The UK Alternative Finance industry Report 2015, NESTA and The University of Cambridge). These figures have almost doubled since last year so crowdfunding is improving access to finance but the area of investment is still cloaked in mystery.

Crowdfunding demystified
Put simply crowdfunding is a way of financing projects and businesses through small contributions from a large number of backers, rather than large amounts from one or a few sources.

Image showing the principal of crowdfunding

Typically an entity (usually a business but it could also be an individual or group of individuals involved in a project that may or may not be profit making) posts a “pitch” onto a crowdfunding platform. This pitch explains the nature of the enterprise, the team involved, how much money is needed, how the money will be used and what “reward” is being offered in return for cash. Interested parties reading the pitch then decide if they want to back the idea by providing cash.

What makes crowdfunding work is the networking effect of people talking about the project and encouraging others to get involved. Word spreads far wider than the group of people known to the enterprise.

A crowdfunding pitch runs for a defined period (although the exact period will vary from pitch to pitch, platform to platform). On the majority of platforms if an enterprise fails to reach its crowdfunding target by the deadline then the enterprise receives none of the monies raised and the cash is returned to the people who pledged it.

So far, so good.

The complication comes because there are several different types of crowdfunding and many, many different platforms. Predominately, what defines the difference is the “reward” mechanism used by each platform.

There are 4 types of crowdfunding platform:

Image showing the four types of crowdfunding platform with examples
Donation
This is probably the platform that is most familiar. No doubt we’ve all been approached by a friend or relative at some point who tells us they are doing something amazing (like running a marathon, climbing a mountain or cycling across a continent) and requesting sponsorship for their favourite charity. In this case the “reward” for your hard earned cash is a lovely warm feeling of having supported your friend and a worthy cause. Examples of this type of crowdfunding platform are Just Giving and Virgin Money.

Reward
A reward-based crowdfunding platform is one where the entity raising money offers something “in kind” in exchange for cash. The nature of the reward here can vary hugely.  I’ve come across many examples including:
A zombie film which attracted investment in exchange for the opportunity to appear in the movie as an extra, in this case a zombie!
Companies making a prototype and then funding its manufacture by offering people the chance to be the first to own the product when it came off the production line. Effectively pre-selling a product before it was actually made.
A group of villagers clubbing together to save their village pub (in Suffolk). I can only assume the reward here was free beer!

Indigogo and Kickstarter are the best known reward platforms but there are a plethora of reward based crowdfunding sites, many serving niche markets and specific groups of customers.

Loan
The loan-based crowdfunding platforms are, arguably, the most successful in that they account for the greatest amount of monies raised. Here, a company (and it usually is a business rather than a one-off project) raises investment in exchange for a higher than average interest rate over a fixed period. Examples in this arena include Funding Circle and Funding Knight but, like the reward based platforms, there are many, many platforms each serving a specific niche.

Equity
Equity-based platforms allow a company to issue shares in their business (without the bother of having to list on a stock market) in exchange for investment. I successfully used this type of crowdfunding platform to raise investment for a business I was running back in 2013. Effectively 10% of the shares in my business were bought by 65 investors.

Investing in businesses is risky. So, anyone investing on the equity crowdfunding platforms has to self-certify as either a high net worth individual or a sophisticated investor, showing they understand the risks of investing in businesses. The best-known examples of this sort of crowdfunding platform are Crowdcube and Seedrs.

Some equity-based crowdfunding platforms have gone even further and rather than opening their platforms to “all” they limit participation to a subset of high net worth individuals and sophisticated investors known as business angels. These investors are generally more “hands on” with the companies they have invested in. They bring skills, experience and contacts, as well as cash, to the businesses they invest in. Examples of this type of platform include Angels Den (for whom I am a Regional Manager) and Syndicate Room.

So, there are many flavours of crowdfunding and part of the skill of developing a successful crowdfunding campaign is selecting the right approach and platform for your project or business.

 
Join a free online, interactive seminar: How to succeed at crowdfunding Book your free place below or find out more here

If you would like help in assessing your options, why not book a place on my next (free) Funding Clinic (in Poole Dorset) or contact me , Hatty Fawcett, direct to discuss your options.

How to value your start-up: A brief, practical guide

Register and download your copy of the “Valuing your small or early stage business: Art or science?”

There comes a point in the life of every business when you know you need more investment to maximise the business opportunity.

If your business is a start-up or small business you may not have the track record or assets to access traditional forms of lending. Alternative finance can be a welcome lifeline. You may also feel you want to bring additional expertise into the business. In which case, angel investment where the business angel brings expertise, skills and contacts as well as their cash can be a better option for raising investment.

Whatever form of investment you choose, you will need to issue shares (equity), which means you will need to value your business. But what is your business worth? How do you value a small or early-stage business?

Valuing your small or early stage business ebookThis brief, practical guide will take you through:

  • Why formal valuation models will only take you so far
  • How to focus on tangible demonstrations of value
  • Why valuation is a negotiation
  • How to replace “finger in the air” estimates with modelled forecasts
  • Why it pays to listen and learn
  • How to chose your investors wisely

All of which will give you a better idea of the true value of your business.

Register and download your copy of the “Valuing your small or early stage business: Art or science?” now

Six strategies for crowdfunding success

Raising investment (be that crowdfunding or angel investment) is hard work. I liken it to running a marathon. Much of the hard work is actually done before the race day itself. So it is with crowdfunding. Before you put your crowdfunding pitch live, you need to do a lot of work behind the scenes to ensure success.

I was recently interviewed by “Let’s Talk Business” and shared with them my six strategies for crowdfunding success. You can listen to the interview (below) which is in two parts.

Hatty Fawcett explaining crowdfunding

Part one: The first three strategies for crowdfunding success

  • Tell a good story
  • Demonstrate traction
  • Surround yourself with good people

Part two: The remaining three stratagies – and one extra piece of advice

  • Forecast the future
  • Invest in your video
  • Prime the pump
  • You only have one chance to make a first impression – make it a good one by getting professional help

If you are planning a crowdfunding campaing and would like someone by your side to help you on your way, why not get in touch?

Let’s Talk Business interview Hatty Fawcett on crowdfunding

This week I was interviewed by the successful Let’s Talk Business radio programme on the subject of crowdfunding. We touched on some interesting topics:

  • Which businesses are best suited to crowdfunding?
  • Is it easy to raise money through crowdfunding?
  • Different options for raising money at different stages of a company’s life
  • Tips and practical advice for proving your business concpet and gaining traction before you go for funding.

You can hear the interview here: