How To Raise £700,000 In Crowdfunding
Learn how to raise money for your business through crowdfunding. Read on for my tips on how to ensure your campaign is a success.
If you are a business owner, you will know first hand that one of the most important things (and arguably one of the hardest) about running your business will be financing it. Whether it is raising money from friends and family, getting a loan from the bank or taking private investment from VCs. Cash is king and if you don’t have cash in your business before too long you won’t have a business.
One way of raising money for your business is to run a crowdfunding campaign. Crowdfunding, like anything, has positives and negatives. It is a great way to raise finance whilst retaining control and sharing your story with your customers. Essentially a marketing campaign. The negatives are the impacts it can have on your share structure if you aren’t prepared for them and of course, if you don’t hit your target, you don’t get any of the money.
Earlier this year I worked with luxury children’s wear brand Wild & Gorgeous to raise £700,000 in crowdfunding.
So how did we do it?
1. We had experience.
The world of equity finance and crowdfunding can be incredibly daunting if you haven’t done it before and thankfully I had. I already knew how to write a pitch, how to write a business plan, how to market the campaign and knew the legal and financial processes involved in getting a campaign together.
But not having the experience does not mean that you can’t do it. Every crowdfunding campaign and fund raise is different and I’ve learnt so much from my last round that I didn’t know before. If you don’t have experience in raising private equity, I strongly advise that you speak to someone who does, even if it is just a quick coffee to share war stories and pick someone’s brain for half an hour. This person may have raised money through crowdfunding or have had experience working in or raising venture capital/investment. Most importantly, don’t be afraid to approach them to ask for help. I’ve been continuously overwhelmed by just how generous other entrepreneurs and people in business can be with their time, especially when you are genuinely asking for their advice and input. I’ve found that generally if someone can help, they will.
2. We planned.
As we were fundraising to grow ilovegorgeous from designing just girls’ clothing, to Wild & Gorgeous and launch their first boys’ collection, we had been planning the campaign for nearly a year before it went live. I originally wrote the business plan in November last year and I worked pretty much full-time on the campaign from January to May, which meant we had all of our ducks in a row ready to launch the strongest campaign we possibly could. As soon as you think “I might need to raise some money in the future”, write your business plan and at least the bones of a 1, 3 and 5-year strategy document. The sooner you start working on these documents and making plans, the better equipped you will be later down the line. It’s also important to remember that these are very much living and breathing pieces of work that should evolve and grow with the company.
3. We had a good proposition.
With a turnover of approximately £2.3m, the business valuation at the time of the raise was not extreme at 2x revenue (£4m). Investors want a good deal! If you aren’t trading or have very little turnover or proof there is demand for your business don’t demand a high valuation. Unless you have invented some incredible piece of game-changing tech (really game-changing along the lines of inventing the wheel!) you will find it much harder to raise on an inflated valuation.
4. We involved customers.
We talked to customers, both wholesale and retail, weeks before our campaign launched. We sent them the business plan, told them what we were doing, asked for their opinions and then a few weeks before we went live we followed up with our video pitch and asked if they would like to invest. Many did, and those who didn’t were all been incredibly supportive and spread the word. This meant that by the time we went live we already had a good idea of who would invest and how much money was in the pot.
5. We had a great video.
I’ve said it before and I’ll say it again, your video is the most powerful tool in your whole campaign. It is absolutely worth investing time, effort, and if you can, money, in.
6. We planned some more.
We ran the project parallel to our core business which meant we had a separate project plan, strategy and marketing calendar, all of which we stuck to. Don’t get me wrong, this is incredibly difficult to do, especially when you have a day job/a business to run, but it is without a doubt worth it. I wrote the press releases, created the social media content, planned our campaign updates, blog posts and emails all before we went live and then adapted them as the campaign evolved.
7. We had a team and advisors.
We’ve worked with some great legal and financial advisors throughout the project. No business is an island and you need a team, even beyond those you have in-house. You simply cannot do everything yourself and who would want to?! Very few people will invest in one person as it is extremely high-risk but people do invest in teams.
8. We network continuously.
This isn’t about going to networking drinks after work where you all stand awkwardly whilst clutching a glass of cheap wine and don’t really speak to anyone you don’t already know. What networking is really about is cultivating lasting, mutually commercial relationships. This means that you get out what you put in and you make an effort to keep in touch with that graphic designer you once worked with or that journalist you met at a wedding or that person you pitched to once but the timing wasn’t quite right. Add them on LinkedIn and stay in touch, if you can help them with something then do. All of these people can become advocates for what you are doing in the future and if you have built a relationship with them they will be more likely to help you down the line.
9. We banged the drum.
If you build it they will not come. As I have said before, you need to market your campaign continuously for the duration, even if you get to the stage where you are overfunding, you have to keep your foot on the gas.
10. We worked really, really hard.
Fundraising is one of the most important things you will do for your business. This means giving it everything you have got, all of the time and as much of your energy as you can muster. I’m all for a work/life balance believe me, but for the 27 days the campaign was live, I literally did nothing else but respond to emails, send out business plans, ask for feedback on our pitch and meet potential investors. We were committed to responding to potential investors and questions within 12 hours, even over the weekends and I truly believe we reaped what we had sown. I know that even if we hadn’t met our targets, I can say that we gave it absolutely everything and our campaign was the best it possibly could be – you can’t ask for more than that.
If you are thinking of crowdfunding your business and would like a free 1:1 consultation then please email me here.