Crowdfunding is a hot topic. Whether it’s to help start a new business, develop a new product, fund the development of a new game or to finance a short animation or film, people are turning to crowdfunding as a way to access finance.
In May 2015, YellowDog successfully raised £150K in just over two weeks on Seedrs, one of the UK’s equity-based crowdfunding platforms. This is half the time it typically takes for a round of this size. So we were really pleased with the outcome.
There’s lots that’s been written about crowdfunding and how to find success. What follows is what we learnt from our experience (and HT Kirsty Ranger, crowdfunding ninja and CEO of Idea Squares for the inspiration).
- Ensure you’re clear about your objectives
Using Seedrs to raise funds aligned with YellowDog’s business model and vision (YellowDog will crowdsource compute power, Seedrs crowdsources money).
It creates a compelling event for any investors, angels or otherwise to help drive them to commit to the investment.
Be clear on how much you want to raise, whether you’re prepared to overfund or not (we didn’t) and what you’re willing to give away for the funds.
- Prepare well
Many say the video is critical. The wording that accompanies your campaign provides the logical reason for why people should invest. The video provides the emotion of the pitch and demonstrates the credibility of the team. Emotion and credibility are the real reasons why people invest in you. I found the video hardest thing to get right and I’d say our video was just about good enough. Not great, but good enough.
Work your own network to pre-fund your campaign as much as you can. If you can start with 35% of your funding target already secured, then you start with fantastic momentum. We had 33% committed when we went live.
Prepare your digital marketing campaign up front. Pre-prepare what you can for your emails, tweets, posts that you plan to send at important points once the campaign is live. We used Mailchimp, Buffer and Capsule to automate as much as we could.
And create a version of your business plan that you don’t mind sending to people you’ve never met. You’ll be asked for it, by lots of people.
- Respond quickly
When your campaign goes live, and you start getting questions (we got many), try to answer them as quickly as you can. I aimed to respond within four hours. I really believe responsiveness matters – it shows that you’re on the ball and you take what they’ve asked you take seriously.
I always asked someone (usually my wife) to read my answer before I posted it as all answers are public and I wanted to make sure my posts answered the question, were easy to understand and concise. Always be positive with your response, regardless of how daft you think the question is. And never patronise the questioner.
Whilst the campaign was live, I found myself drawn to the YellowDog campaign page, constantly refreshing it to see what updates there were. When no one had invested, or, even worse, taken money out, I was crestfallen. When they had invested, even if it was £10, I was jubilant.
In hindsight, I loved it.