You probably would’ve seen that we recently raised funding through our members (you!) - since then, we’ve gotten quite a few emails requesting more details. Here are seven tips, written by Rob, for anyone else considering a similar route.
1. Big doesn’t always mean better
There is so much macho, one-dimensional spiel out there about building BIG businesses.
The more you venture into VC land the more you’ll hear this kind of rhetoric.
We agree with Seth Godin: “Big doesn’t equal better. Better equals better.”
2. To someone with a hammer, everything looks like a nail
To some people crowdfunding seems a nightmare route. To some people you shouldn’t touch VC money with a barge pole.
Often opinions are based on peoples’ own experiences.
Ask for advice, listen politely, don’t take things personally, assimilate, assess, but go with what you want to do, not what other people want you to do.
3. Private individuals (not angels) are up for investing in ideas they like
Since the banks that we are helping people to escape from so royally messed up our economy, there is a shocking lack of viable places for people to invest their money.
Granted, there are safer places to put your money than investing in an early stage start-up.
But lots of people seem to be thrilled by the idea of supporting an idea they believe in.
4. Different routes come with different chances of success / failure
Call us conservative but we would rather have a larger chance of our business surviving than a smaller chance of hitting the absolute big time (when you’re pitching VCs you’ll hear this question a lot: “do you want to build a $1billion dollar company?”).
You don’t hear what happens to the majority of businesses that don’t reach this point.
5. Remain true to the core reasons why you’re doing this.
The more you get into ‘start-up land’ the easier it is to feel insecure that you should be following the VC-funded aggressive growth route taken by every other start-up featured on Techcrunch.
Online businesses aren’t a world apart from offline businesses.
There are millions of online businesses and a handful of Instagrams.
Stick to your mission.
6. There is no right or wrong way.
From Derek Sivers – When you build a business you can create your own utopia with your own rules and guidelines.
There are no rules. Do what you want.
Back yourself. Build your business in your own way and make sure you have fun while doing so.
7. The beginning is nigh
We acknowledge that not everyone has a ready-made community to make a crowdfunding pitch to.
However, our experience show that there is a power-shift happening – the choice is no longer IPO or VC/angel.
There is the third way, a round that goes above a friends and family round but allows you to retain management control as a founder.
Crowdfunding privately is a legal minefield in the UK unless you fulfil one of these criteria:
- Your investors are all self-certified HNWIs (like this: http://crowdfunding.trampolinesystems.com/)
- You get your investment opportunity checked by an FSA authorised firm (like this: http://www.brewdog.com/equityforpunks)