We arrived at the Escape School last night fully aware of the importance and advantages of seeking investment as a new business. What we didn’t know, however was exactly how to go about this. How do you attract the right investor at the right time? How do you take your business to the next level through crowdfunding?
A Bit About Fantoo:
Jordan began the evening by taking us through his entrepreneurial journey. From starting his first hi-fi company at only 18, to founding the intelligent emailing system Fantoo, it was clear that Jordan was knowledgable in crowdfunding.
Jordan took the idea of Fantoo to Ignite2012, Europe’s first million pound accelerator programme, which provided investment in return for equity and a great network of support, mentors and investors. In 2013, the team raised £450,000 through equity crowdfunding on the Crowdcube platform, overreaching their original target of £400,000.
A year later, they pitched their business idea to Michael Dell, the founder of Dell Computers, and won the very first ‘Start-up in Residence’ competition. For the next two years Fantoo will work out of Dell’s UK headquarters, providing them access to Dell’s technology and resources. Jordan explained that this backing by Dell added huge credibility to the company. By this point in the evening, needless to say we were all incredibly impressed.
After Jordan’s presentation, James from Crowdcube joined him on stage for a Q&A session. There were a lot of great questions being asked and a lot of enthusiasm in the room. A common concern shared by the audience was whether or not experience is essential for investment. James explained that in place of experience, passion and preparation will help secure investment.
Key Points From the Q&A:
1. Add credibility to your start-up by forming partnerships.
- Start partnerships with already established brands.
- Build partnerships with as many angel clubs as possible.
- Network with investors so that they know you by the time you launch crowdfunding.
- Be aware of organisations that ask you to pay 5-10K. You shouldn’t be paying someone when you’re trying to raise money.
2. Be prepared for the long run.
- Work ahead your schedule before you get to the crowdfunding platform.
- Don’t expect to get money ‘next week’. Raising capital could take 4-6 months or longer.
- Be honest with yourself when you feel your product isn’t ready.
- Create an engaging short video that clearly explains your idea – keep it to 3 minutes.
- Have your detailed material ready to show; this includes a business plan and a financial budget. Be aware that preparing this material may take some time – a month or two.
3. What might investors ask about your business?
- Interrogate yourself about the business as if you were to present your idea on Dragon’s Den.
- You should be always able to explain why you’re doing what you’re doing.
- Focus on all aspects of the business and not just one area.
- Make sure you know your product inside-out.
- Know your target market, your budget, and your team.
4. Get SEIS (Seed Enterprise Investment Scheme) insurance.
- SEIS is a package of reliefs introduced in April 2012 as an extension of the EIS designed to help smaller, early stage companies, e.g. investors receive a tax relief as compensation for high risk investments.
- Make sure you get SEIS before you go onto the platform, as more people will invest when you have SEIS.
- Plan ahead to ensure you have this in time for the launch.
5. Get seen and written about and think outside the box.
- Share your campaign in as many ways as you can to build a following. Large investments often encourage others to invest.
- Contact journalists to publish your campaign. Build a relationship with journalists before sending them a press release. Published articles can bring tens of thousands worth of investment.
- Write a blog or journal and update it regularly.
- Get involved in webinars with help from Crowdcube.
- Attend conferences and network with people.
The room was buzzing for another hour after the talk finished, and it seemed myself and others left feeling much more assured and determined than we did when we arrived. Thank you Jordan and James for an insightful, and informative evening.
This is a guest post by Katerina Vlckova.