By Joe Sillett, Co-Founder and CEO, The Funky Appliance Company
Crowdfunding is a brilliant way of raising capital and winning an army of supporters for your business. As an SME co-owner, I have carried out six successful crowdfunding campaigns using equity crowdfunding platform Seedrs.
With crowdfunding, you get a better valuation from selling shares to an army of supporters rather than having one investor with too much control and buying power. Each one of those supporters can help you in your business journey.
Alternative finance options like crowdfunding have become increasingly popular in recent years, as they are a great way for business owners to boost cash flow or launch new products. There are generally two main types of business crowdfunding: rewards-based, where investors receive a product token or discount in exchange for their donations; and equity-based in which shares in the business are given in exchange for funding.
Despite all the positive benefits, it’s a mistake to think that crowdfunding is easy. A successful campaign requires a lot of work, both in the preparation and then the execution of a campaign.
Crowdfunding is incredibly time intensive – you need to be available round the clock if you want your campaign to be a success. You must be extremely responsive to every single query that comes via the crowdfunding platform and totally on top of running your actual business at the same time.
Time is of the essence when responding to prospective investors, this shows them you’re on the top of your game and that you’re dedicated. You should make yourself available to answer queries all day, every day. If you think you can sit back and the money will roll in, you will be very disappointed!
The range of businesses which use crowdfunding to raise capital is incredible. If you have a product or service which you believe in and you think has the potential to do very well, investors will often spot the opportunity as well.
Thinking of trying it for your business? Here is some key advice to consider first.
1 Do your homework
You need to know everything about your business and your business plan. You will be required to create a professional looking pitchbook to present to investors. Remember that everything you put together, from your documentation to anything that will appear online for stakeholders to see, must be well-prepared and meticulous. When compiling your pitchbook, ensure all that appears in there is well thought out and well-planned. Try to get feedback from others. When you’re ready and confident that everything is as good as it can be – and if budget allows – have a professional designer do a final version to make it look as slick as possible.
2 Choose your accountant wisely
Hire a great accountant who will challenge every single line and rationale in your numbers, whether it’s a three-year plan or a five-year plan. You must be able to know and explain those numbers to anyone at any time. If someone says, “Tell me what this means?” or “Tell me how you justify this figure?” you must know the answer immediately. I cannot stress the importance of this enough. You must make sure the rationale for those numbers is watertight in your mind for when you present that to prospective investors.
3 Consider a professional crowdfunding agency
Crowdfunding is a very particular science so it’s best to work with the experts that know it inside out. There are some fantastic crowdfunding agencies out there to choose from and you need people who have extensive experience that can help you to prepare your pitch. People who have executed hundreds of campaigns so know what works and what doesn’t. Hire a crowdfunding agency and you will reap the benefits of their knowledge, yes there is a fee attached but it’s worth the fee because of how it will take you forward.
4 Don’t scrimp on the video
It’s worth investing in a professionally filmed video, which can cost upwards of £3000, but if circumstances or funds don’t allow, a self-filmed one is fine. This video is your chance to professionally get across your brand, your unique selling points, your point of difference, your ambition, your vision for the future, your personality and a chance to explain to investors why your business will succeed and map your points of success which will drive the business forward.
Keep a list of 5 or 6 main bullet points just to the right of your camera, which you can temporarily look at, and once you have seen the headline for each bullet point, this is the trigger for you to speak directly to the camera and naturally without having to refer to any more notes. Do a couple of practice runs first so that you know that you can let the content naturally flow when the record button is pressed.
5 Be yourself
Get excited about your pitch, be authentic and let the investors feel your enthusiasm. Visualise a positive outcome before presenting –picture that these people could be your future business partners. This will help to keep you feeling and speaking in a calm, confident and credible manner.
About the Author
Joe Sillett has been an entrepreneur for over 20 years and in that time, he has designed, sourced and sold over £20 million worth of products. Joe co-founded The Funky Appliance company with his wife Sadie in 2016. The company puts a stylish design twist on small domestic appliances. The couple completed their first crowdfunding campaign in March 2017 and in total have raised just under £1 million over 4 years which has enabled the company to expand its product range and have 403 investors in over 25 countries. www.funkyappliance.co