During our March networking breakfast at The Gamekeeper, Hatty Fawcett from Focused For Business gave a short talk to help us demystify the world of crowdfunding.
She covered 3 key areas:
- What crowdfunding is
- The different types (or “flavours”) of crowdfunding and
- Gave her tips for running a successful crowdfunding campaign
Hatty herself raised two rounds of investment for her start-up – one through angel investment and one via crowdfunding – and she now uses her practical experience to help small businesses raise investment simply and quickly.
For those of us in the room who were unsure whether we needed or wanted to know about crowdfunding, Hatty quickly got our attention by revealing that 300,000 businesses raised over £3 billion last year, according to a recently published report by NESTA and The University of Cambridge (Pushing Boundaries: The UK Alternative Finance industry Report 2015). In an environment where banks aren’t lending at the rate they used to, crowdfunding provides a viable alternative to investment and funding.
Hatty described how crowdfunding works to connect businesses looking for investment with investors looking for a better return on their money than currently offered by the banks. She explained how investors look for a “reward” in exchange for parting with their hard earned cash and that this reward can come in the form of interest, shares or some other “in kind” reward. It is the nature of these rewards that shape the many different crowdfunding platforms available.
Hatty also highlighted that crowdfunding was “all or nothing” in approach and that if a company failed to raise its target investment then even pledged investments were returned to the investors and the business had to walk away empty handed. Crowdfunding is not as quick and easy an option as some would lead us to believe. As Hatty pointed out, a successful crowdfunding campaign is like running a marathon – you have to do a lot of preparation before race day if you want to succeed.
Hatty also shared her top tips for successful crowdfunding:
- Tell a good story rather than rely only on a dry business plan
- Be clear and succinct in what you say as investors are busy and won’t waste time on a pitch that is confusing, too complicated or full of waffle
- Pitch with passion and enthusiasm – after all, if you are not enthusiastic about your business you can’t expect an investor to be!
- Demonstrate what you have already achieved in your business (your track record) and why you have the right team in place to deliver what you say you want to do
- Prime your pump – in order that “the crowd follows the money” you need to get your crowdfunding campaign off to a strong start by ensuring you have investors standing by to pledge their investment the moment the crowdfunding campaign goes live. The crowd will follow the money but there has to be money pledged for them to follow!
For more information on what crowdfunding is, read Hatty’s blog post: What is crowdfunding?
To learn about how crowdfunding can help your business, you can book onto Hatty’s free upcoming crowdfunding seminar on Thursday 17th March at 3pm at Outset Bournemouth. For details, click here.
If you are ready to start seeking investment but want help, you can book onto one of Hatty’s monthly free Funding Clinics. The next one is being held on Thursday 24th March between 9am and midday at Princecroft Willis in Poole. To book a free place, email .