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 new 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.
Their crowdfunding campaign didn’t raise what they hoped but they still feel the campaign was a success and that crowdfunding was very worthwhile. Hatty Fawcett of Crowdfunding Accelerator caught up with Kellie to find out why and to discover what they’d learnt in the process.
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 over-funding 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 considered 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. That would have cost us money!
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! it was disappointing that we didn’t hit our target but we have learnt so much and had such useful feedback we feel the campaign has delivered – just not in the way we expected.
We now know that we were not focused enough on finding that first 30% (of our target). It was dependent on us to get those pledges in and, whilst we believed we had these teed up, it took more than we anticipated to bring them home. The first two days of the campaign were exhausting, asking friends and family to pledge. If we had understood the importance of this better, we’d have prepared more pledges before going live.
That said, we’ve had amazing feedback regarding the new product. That’s been insightful. We know we have a desired product, but we now realise there is another way to deliver this – as an add-on option rather than a bespoke product. We had considered this before but had opted to make a stand alone product. It was feedback by via the crowdfunding campaign that has caused us to re-think this decision. We have a better product as a result.
Another unexpected outcome has been the amount of exposure our business has received and the impact this has on sales. We’ve had some lovely PR which has been brilliant (including a spot on BBC Business Breakfast). Better still, we’ve seen this exposure directly impact on sales. Our sales are up almost 20% which is thanks to the crowdfunding campaign exposure. Experience tells us that this will also bode well for the all-important Christmas sales period too.