We’re delighted to present this guest post from one of our Entrepreneur Academe mentees, Fiona Swan, and her colleague Vincent Breslin of Sian’s Plan. Fiona writes in great depth about how Sian’s Plan recently successfully raised £100,000 in a crowdfunding campaign.

Introduction

We (Sian’s Plan) recently raised a little over £100,000 by crowdfunding on the European equity crowdfunding platform Seedrs. It was an incredible experience for our small team; in the end it was hugely rewarding, but at the time very stressful.

We’ve made mistakes, we’ve learned, we’ve read all the standard ‘how to run a crowdfunding campaign’ articles. They didn’t help. Post success we’ve had many emails and calls from others looking for advice and we’re sure that many will find themselves in a similar position so here’s our go to guide!

Note: our experience is in equity based crowdfunding, I’m confident that reward based crowdfunding (eg Kickstarter) is a different beast altogether.

tl:dr you make the crowd

First things first

One thing I’ll say up front is that you need to be prepared. If you aren’t, then don’t expect a crowd. We spent over a month researching, speaking to successful crowdfunding campaigners and developing our strategy (things like preparing databases of people to contact — 7,000+ email addresses, LinkedIn Groups, newspapers, email content, images, Facebook posts, press releases and more). That still wasn’t enough to hit our goal. We had to continually adapt and try new strategies once the campaign was underway. The effort required was huge.

Why did Sian’s Plan raise investment by crowdfunding?

The reasons behind us taking this route for investment were:

  • we needed the capital to implement our strategy;
  • we are a consumer focused business so thought crowdfunding would work well and;
  • we have found it hard to attract investment in a male dominated angel investor world (we’re aimed at mums for the most part) and thought that validation from our target market would answer a few questions.

Prepare to succeed or prepare to fail

So upload your campaign, hit go and wait for the floodgates to open? Crowdfunding seems simple — you upload your project to the platform, wait for the crowd to take hold and you reach your target. If only…. Crowdfunding is hard work. We knew it was going to be but it turned out to be much more of a challenge than we could ever imagine.

From pitching and attending events every day of the week, to writing blog posts and creating a buzz on social media, promoting your crowdfunding campaign is a full time job on top of your full time job. You need the right strategy in place to climb as high up that crowdfunding tree as you can. Investment from the crowd isn’t achieved, it’s earned.

We spent many hours in preplanning. We developed strategies for all social media platforms (inc Linkedin) with the goal of getting as much exposure as possible. We wrote sample Facebook posts, Twitter posts, emails, blog posts and used awesome tools like Buffer and Mailchimp to continue working whilst also promoting our campaign online. We developed databases of LinkedIn groups to approach and worked (or in startup speak, hustled!) every angle we could (Irish, Northern Irish, Welsh, London, London Irish, Irish in England, American Irish, Irish in Australia, Female Entrepreneur, Female Founder, mums in business and more!). But that alone wouldn’t have been enough. We had to adapt half way through when we were flatlining on 50%, were trending on the last pages of Seedrs and didn’t seem to have any chance of hitting 100%.

What we (thought we) knew going in

We spent a great deal of time researching crowdfunding, analysing the platforms available (Seedrs, Crowdcube) and speaking to those who successfully raised money in the past.

Common (conflicting, at times) advice included:

  • If you reach 30% — 35% of your target in the first 2 weeks you are almost guaranteed to reach your goal;
  • You need to have 20% up front, know where you’re going to find 40% and 40% will come from the crowd;
  • You need to hold 10% back till the very end so you can get your campaign over the line.

Our experience:

  • We reached 40% in the first 2 weeks but we would have failed had we rested at that point;
  • We had 20% lined up at the start from some of our previous angel investors;
  • We didn’t hold 10% back to hit our target as we didn’t have the money.

What worked and what didn’t

Using social media to create a buzz

According to the The Kickstarter Handbook only 16% of pledges come from people browsing the site. This means that a whopping 84% come from outside sources. With social media being the most accessible way for us to get the word out, that’s where we headed.

Congrats to our friends at @siansplan who’ve raised 91% of their crowdfunding campaign. Help them reach £100K here: http://t.co/Ctv7AmU7VF — The Summit Dublin (@SummitDublin) March 22, 2014

We set up a dedicated crowdfunding page on Sian’s Plan to direct traffic to. With over 50% of visits to this page coming from Facebook and Twitter it’s easy to see the power of social media. On any normal day we’d usually send out 4 posts on Facebook and 6 on Twitter. It’s hard to get the balance right between self promotion and engaging content so we limited the posts regarding our campaign to at most two per day on each platform. This went out the window in the last few days when we went for one final push (which I will talk about in the next section) but we achieved over 100 shares and went from 85% to 100% and into overfunding in a matter of hours.

Interesting finding

We scraped all of the available Seedrs campaigns to find social media profiles for people who had invested £200+ and analysed who they followed on twitter and LinkedIn. We thought we could use that information to target potential new investors but in the end the information was relatively scarce and it would have been a huge challenge to first of all convince someone to think about crowdfunding, and then convince them to invest in Sian’s Plan. This information might be of use to crowdfunding platforms though! We noticed that many investors followed both gambling and financial companies. I’m sure one of you could use that piece of insight to your advantage.

Screen shot 2014-08-04 at 11.32.50

The spike you see on the left is the traffic from Facebook to our crowdfunding page that day. We reached our £100k target, taking in £15k on that day alone.

LinkedIn

We used LinkedIn as a great resource to get our message across. Utilising the angles we had (Irish, Female Founder etc), as well as the analysis (above) of what investors on the Seedrs platform followed, we created a database of hundreds of Linkedin groups. We then contacted each manager and asked if they would feature a post of ours as ‘managers choice’. With most groups having over 1,000 members and the majority of them getting a group update email, this little trick got us into 1,000s of inboxes around the world.

Building momentum

Momentum, like everything else in the startup world, is crucial. It’s the key to a successful crowdfunding campaign. You need to keep the ball rolling. We constantly drip fed updates throughout our campaign. If we signed a partnership we would push that out, if we were in the paper that was added. These things keep potential investors interested and they can see you are working as hard as you can to achieve that goal. We also sent out a weekly ‘potential investor update’ email. Anyone who had requested more information on Seedrs or elsewhere (and left their email address) would get a personalised email with updates every week. We know this worked and could track those that invested. The list was about 50 strong at the end. However, you will more than likely experience a lull at some stage throughout your campaign. We hit a big one but managed to pull through (below).

One-off promotional eventsScreen shot 2014-08-04 at 11.36.47

We tried a number of one off events like our Paddy’s Days cupcakes. We’d recently moved our London team into Central Working in Whitechapel, a fantastic space with some great startups. To promote our campaign we decided to bake some Guinness cupcakes for the office. Take one for a Tweet or Facebook post. We got a few tweets, had a bit of fun but didn’t get a huge response. A lot of effort for small reward!

PR

Screen shot 2014-08-04 at 11.39.07

We enlisted the help of a PR company to help us get in the papers and online. Over the course of the campaign we were featured in the Metro, Telegraph, Sunday Times and many online platforms such as The Huffington Post and The Grocer. We know that 4% of our investors (from a survey) found our crowdfunding campaign through the papers. This may seem relatively small, but publications were weary of posting anything about crowdfunding so the vast majority of these articles didn’t mention our campaign. What’s harder to measure is the impact of being featured in these prestigious publications had on those thinking of investing already.

In short, unless you are pitching towards a dedicated crowdfunding publication like Crowdfund Insider, you will find it very challenging to convince publications to write about your campaign. That’s not to stop you focusing on other angles both to help convince people to invest and to make readers landing on your homepage aware of your campaign.

Bloggers

We had a very similar response from bloggers and the same advice applies, however saying that, if you’re raising investment for an amazing safety device for children’s bikes then parenting bloggers may be more willing to write about you.

Educating potential crowd investors

This is something that you might forget about but if you’re hoping to convince family, friends and your community to invest then you’ll need to educate to some degree. We wrote a number of articles;

How to invest on Seedrs – the process from sign up to depositing money

Where Is Your Investment Going?

Invest in Sian’s Plan and be rewarded

10 reasons to invest in Sian’s Plan

Sian’s Plan Needs You!

We’re raising £100k by Crowd Funding

These articles were incredibly useful as resources within the regular emails we sent out and to forward any questions to. They took time to put together but saved us a lot of time in the long run.

Influential people

This was something that worked incredibly well for us to force momentum. We put together a list of 10 of the most influential people we know in the startup scene, emailed them a request to invest a tenner and tweet about it. The tweet content was pre-populated to make it as easy as possible.

The intention here was twofold:

  • Have influential people promote our campaign to other influencers;
  • Have influential people as investors to help convince potential investors to invest.

Here’s the email:

Screen shot 2014-08-04 at 11.42.45

And here is one of the tweets:

I’ve been following the startup @SiansPlan since Seedcamp a couple of years ago, and have just invested on Seedrs: http://t.co/AGPKZOCIPX — Glyn Britton (@glyndot) March 21, 2014

Thanks Glyn!

Setting your own deadline

With the Seedrs platform you have 90 days to close your funding campaign. From our perspective, that was just too long. We knew our budgets wouldn’t allow us to survive that long and so we set our own target at around the 60 day mark (below). If we were doing it again, we’d probably aim closer to the 30 day mark. That allows you to really focus your efforts, drive momentum and set a deadline before you’re worn out!

Don’t forget it will take time to close the deal once your target is met. We’re talking due diligence, legal docs, waiting period for investments to be deposited and cleared (2 weeks) etc. Talk to your provider and get an idea of these timelines. Be proactive if you can and tee everything up to be as quick and painless as possible.

Closing

Not just related to crowdfunding, being able to close a deal/investment is key. Very early on in our campaign we were contacted by an investor who was interested in putting in £30,000. This would have been a huge boost so early on but for whatever reason, we didn’t close it. This investor did end up investing a significant amount but we lost the early momentum and missed out. I’m confident that a tighter deadline would have mitigated against this.

Breaking the lull/generating momentum

At the start it was all hands on deck pushing, pushing, pushing and it worked. We managed to double our personal target of 20% in the first 2 weeks and then hit 60% within 6 weeks. Then…… flatline. We hovered on 60% for the next month going up a few percent but not moving significantly, even more worryingly we went down 4% (investors that committed but didn’t deposit funds in time).

We realised that our momentum had slowed to a stop and we were very concerned at this point and seriously considered pulling the campaign. We called a meeting on a Monday morning and agreed we’d give it all we could till the following Sunday and if it didn’t work out then we’d pull the campaign. Even though we had another month left, we had nothing major on the horizon and we wouldn’t have a business left if we continued to spend all our time crowdfunding.

By this point we had learnt a hell of a lot from research and experience. We knew that Thursday, Friday and Saturday were the days people most likely invested. We were very fortunate to have £15,000 committed from previous investors to play with and were sitting around the 65% mark.

The plan

  • Thursday – Invest £5,000, hit 70%, email potential investors, Sian’s Plan members (7,000) and the 10 most influential people we know (email above).
  • Friday – Invest the remaining £10,000, reach 80%, email potential investors, subscribers and get everyone we knew to share on Twitter, Facebook and LinkedIn.
  • Saturday – Fingers crossed we’d hit 90% and the crowd would kick in.

How it played out

Thursday

We hit 75%, exceeding our targets with over 30 new investors. Our 10 thought leaders invested over £2,000 between them (we were over the moon).

http://t.co/E29kWof2RP @siansplantv – great business to help people eat better and waste less. Crowdsourcing now. Invest a few £€$ like me — Andy Porteous (@andyporteous) March 20, 2014

Friday

We hit 85% in the morning and had an unbelievable response on Facebook and Twitter. By 4pm we were at 91% and sent an email out to the potential investor email list informing them about all the thought leaders they’d be joining in investing in Sian’s Plan. Immediately we had emails coming in asking for more information and then they invested.

Here is the email we sent to over 50 potential investors showing them 4 industry leaders who also invested in Sian’s Plan:

Screen shot 2014-08-04 at 11.49.05

The team here were on a buzz all day Friday. We had planned to work relentlessly for the whole weekend promoting but by 7pm on Friday we were at 99%. After a well deserved drink we all headed home and woke up on Saturday to see we had reached our target at around 11pm.

Saturday

Done!

Common (conflicting) advice vs. our experience

If you reach 30% — 35% of your target in the first 2 weeks you are almost guaranteed to reach your goal (ie. the crowd will kick in and drive you to completion).

We reached 40% in the first 2 weeks but we would have failed had we rested at that point.

Based on money that we knew we had coming in, we put a strategy in place to reach 30% in the first 2 weeks as advised (details above). We ended up hitting over 40%. Over the next week or so it kept growing, albeit a little slower — 50%, 58%, we thought we were flying.

We expected the crowd to kick in at this point. Nope. We flatlined for nearly 4 weeks… We actually went backwards, 57%, 56%, 55% (if crowd investors don’t deposit their money within a few days then their investment is struck off – we weren’t aware of this). After such a great start and all the effort we were putting in, this was a kick in the teeth for the team. We were off the front pages of Seedrs, down to the bottom and all appeared lost.

Turns out that this 30% figure merely means that companies reaching it are more likely to have what it takes to work their asses off to hit the 100% mark. There is no magic mark where the crowd sit up and go ‘right, let’s go!’. I see this mistake very often when reviewing other campaigns. The target you are working towards should always be 100%. Anything less is not going to cut it.

You need to have 20% up front, know where you’re going to find 40% and 40% will come from the crowd.

We had 20% lined up at the start from some of our previous angel investors.

We launched with around 10% (£10,000) then deposited the rest over the next few days to bring the total to 20% within the first week and keep us trending on the front page. At that point we were only sure that we had 20% of what we needed to raise (not 40% as advised).

As for knowing where to look for the other 40%, all we knew was that there were hundreds of opportunities out there. We collated huge databases of Linkedin, Facebook and other online groups. We planned on attending every event and pitch that we could. We told everyone we met and keep in regular contact with our 10k Sian’s Plan members.

Analysing the breakdown of investment (below) shows that 32% of the money came from people that we had no connection to whatsoever. Either they were on Seedrs already, had seen us in the paper or online somewhere. Most of this money came in during the final 2 days which goes to show the importance of momentum.

You need to hold 10% back till the very end so you can get your campaign over the line.

We didn’t hold 10% back to hit our target as we didn’t have the money.

This just wasn’t an option for us, we didn’t have the luxury. We bet all on our ability to drive momentum and managed to go from 60% to over 100% in the last 3 days of our campaign.

Breakdown of investment

The breakdown of investment sources is quite interesting. Common advice was that 40% would come from the crowd. The crowd is a difficult to quantify but in our chart below we have calculated the crowd as people that we had no connection to whatsoever. These investors were either already on the Seedrs platform or found out about our campaign from a source other than our own promotion.

One of the major points to consider when crowdfunding for equity is that almost 40% of our investment came from a source that would have invested had we been crowdfunding or not. Not everyone is aware of this but if you look at successful campaigns you will see larger investment amounts from sources such as VC firms, angel investors or elsewhere. It is these investments that give the crowd confidence to get involved.

Taking one of the most successful campaigns on Seedrs right now (July 14), the level of investment raised to date is ~£450,000. Looking at the investors, approximately £250,000 has come from investors that are established angel investors or VCs (just looking at the top investments and names I recognise). That’s over 55%. My calculations may be a little off here but the point is that these relationships were more than likely developed and secured before the crowdfunding campaign was launched. Just as we did.

The importance of a community is evident also where 13% of investment was sourced. We’re fortunate to have a strong one.

Screen shot 2014-08-04 at 11.53.52

Conclusion

From our experience, unless you have a significant portion of investment already in place before you launch your crowdfunding campaign, it wont be successful. Anecdotal evidence suggests that you need around 40% of the investment you are looking for prior to launching your campaign. Judge the level of crowdfunding you wish to raise based on what you have already secured ie. if you have £40,000 then £100,000 is a realistic target.

Preparation is key and the workload should not be underestimated. You need to get as many eyeballs on your campaign as possible. An already established community is incredibly helpful, ours were fantastic at sharing our message with their friends as well as investing themselves. Aside from the community, spend time researching where you can spread your message. We spoke to over 100 Linkedin group managers prior to launch and asked them if they wouldn’t mind making one of our posts their ‘managers choice’. This little trick got us into thousands of mailboxes around the world. Facebook worked incredibly well for friends and family. Between the team we had 100s of shares. Bear in mind that although a lot of these guys invested, the amount is relatively small (£10 – £200 typically), however it’s great for driving momentum and getting your campaign to the front page of Seedrs.

Get key influencers to spread your message and give the crowd confidence to invest. That current successful campaign on Seedrs I mentioned have uploaded videos of angel investors explaining why they invested. This is incredibly powerful and something we’d look to emulate should we crowdfund again.

Set your own deadline. 3 months is too long to be distracted in my opinion. Work harder and faster for 30 – 60 days and be done with it. Crowdfunding is incredibly hard work, but if you’re prepared then the rewards are well worth it!

Hopefully our experience can help you understand crowdfunding a little clearer. If you have any follow up questions leave a comment below and we’ll do our best to sort you out. Good luck!

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