Crowdfunding Revealed 2/3 – The Campaign Execution
In last week’s blog I covered ‘Preparing the Crowdfund’. The preparation is integral for a successful crowdfund and makes the execution substantially easier.
Executing the Crowdfund
By this point, you should have a pre-funded amount that’s ready to drive initial momentum into the crowd and a marketing plan designed to increase traffic to your campaign.
We spent a lot of time deliberating when to launch our crowdfund. We came to the conclusion, with the help of Crowdcube, that the best times of the year to launch campaign were: January (everybody would be back working after the Xmas break), prior to the end of the tax year (SEIS and EIS allowances), in September/October (everybody back from their Summer holidays). We launched our 30 day campaign in the first week of January.
Within the first few minutes we had a number of small investments. Then it really exploded. Within the first 7 hours, we’d raised £10,000 before any of the pre-fund had been invested.
From what I had witnessed in other crowdfunding campaigns, as soon as the momentum halts, unless you have a substantial commercial breakthrough, the campaign is dead in the water.
Within the first few days, we were already at £50,000 but, by this point, our entire pre-funded £25,000 had already been invested. Now, it was completely over to ‘The Crowd’. We waited for days, adding around about an average of £2,000 a day, but there was no sign of the 400,000 strong crowd. We had to drive our own initial momentum. Luckily, at the time of launch, we were concluding a listing with John Lewis. This was finalised shortly after launch so we were able to announce it on the campaign and across our email marketing distribution lists. This got us to around £65,000 (43%)…we still had a long way to go. Over the next two weeks, we guerrilla sampled in various locations around London with special Crowdcube labels to drive traffic to our campaign. As we were a Virgin Start Up, Virgin kindly spread the news that we were crowdfunding across their social channels. I also had a number of investors appear from my personal network, many a complete surprise but I am eternally grateful for their support.
As we entered the final week of the campaign, we were around £85,000, still £65,000 short. We had over 1,000 people following our campaign on the platform as well as around 100 people that had requested business plans, phone calls etc. I had the feeling that these investors were waiting for a final ‘hook’ – something to get them over the line. We had been talking to Spinneys, Dubai largest supermarket, for sometime and finally agreed a listing.
We announced the listing and the crowd reacted. We raised over £100,000 in the last week alone. I’d have loved to have seen how far we could have gone if we had another week or so. After 30 days, we had reached £187,340, 124% of our initial target.
Managing Prospective Investors
As soon as you launch your campaign, clear your diary. For the next 30 days (or however long your campaign is), you will now be concentrating on managing investor requests for business plans, information, phone calls and meetings. During our campaign we sent out over 100 business plans. This in itself is a minefield. Many of our competitors use it to find out sensitive information about our business. I used LinkedIn a lot to do my ‘Due Diligence’ on each request before I sent out any information but this, of course, isn’t watertight.
Once the business plan and pitch deck had been sent out, I’d add the email address to our Mailchimp account and keep the entire mail list updated with the news on our campaign. Rather than just sending out generic updates, I tried to make these news as topical as possible i.e. hitting milestones, large investments, commercial progress.
I had a number of calls and meetings with a interested investors and a number of these investors invested over £5,000. In the final numbers, we had 12 investors that invested over £5,000. These investments contributed £118,500, or 79% our target. You can see for yourself just how vital these investors were to our success.
My advice is treat every prospective investor like they are going to be a lead investor. Of course, there were plenty of investors that would request business plans, ask a series of intricate questions and then would invest £10. But that’s another brand ambassador who’s joining us on our adventure and is likely to tell their network all about our business.
In next week’s blog I will cover the weeks and months after completing a crowdfund.