Crowdfunding: founders experience and advice
Raising capital through crowdfunding can be a great way to build community but don’t underestimate the effort involved
Raising capital through crowdfunding
Crowdfunding has become an increasingly popular way to raise capital, helped by some very high-profile campaigns. To understand the realities of crowdfunding we called on the experience of three FinTech founders.
Speaking on the Rise Founders Coffee Club podcast were Lucy Mullins, COO and Co-Founder of Stepladder, and Loral Quinn, CEO and Co-Founder of Sustainably. Here are some highlights from their conversation:
- Individuals want to invest in the products and services that they use and love
- Crowdfunding does much more than raise capital. It enables brands to reach out with positive PR and marketing messages and grow a community of engaged users.
- Being able to invest as little as £10 means the bar for entry is very low, unlike a friends and family raise that may have a significantly higher minimum investment.
- Customers are excited to own part of the business and go on your journey of growth with you
- Do not underestimate the length of time and amount of work involved in a crowdfunding campaign. Promotional, legal and administrative aspects all need to be carefully coordinated.
- Be very clear on the fee structure for your raise. There are multiple options to consider.
- Creating excellent content is important to a successful campaign but can be expensive. Consider how you could produce a marketing video with a tight budget.
- FinTechs will face significant compliance challenges. Any marketing claims will have to be properly evidenced.
- Having cornerstone investors lined up to support your campaign and quickly get it to 80% or 100% is a great way to build momentum
- It can be important to quickly exceed your target. Doing so creates excitement and helps with promotion. Set your goal accordingly.
- Don’t run the campaign for too long. A big push at the start is key.
- Crowdfunding platforms can provide advice and support, or consider using a specialist agency
- Crowdfunding involves significant risks for the investor and is not a liquid investment. The funding platforms make this very clear.
Crowdfunding tips from Ken Donald
We also sought advice from Ken Donald, Co-Founder and COO of Snoop, the personalised money-saving and money-simplifying app. In 2020 Snoop raised £10m from 1,712 crowdfunding investors. Here are Ken’s three top tips:
- Identify how you can use your audience, network and contacts to create that all-important buzz at the beginning of the process.
- Maximise the opportunity of the pre-registration stage. Pre-registration is an excellent opportunity to capture people’s interest and build excitement, and that is the thing that can really drive your campaign when it launches.
- Keep building momentum. It’s not a “launch, hit your target early and you’re done”, kind of process. There’s an opportunity to keep building on your impetus and grow your business further. Staying on top of updates and continually finding other ways to engage your audience is key.
These tips come courtesy of Seedrs who interviewed Ken to learn more about his experience of crowdfunding. Read the full article here.
- To learn more, listen to the full podcast on Apple Podcasts, or catch-up with Rise's previous podcasts online.
- Check out forthcoming Rise events or subscribe to our weekly newsletter for more founder advice and industry news.
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