Crowdfunding: What/Why

As we are nearing our launch on Seedrs, I thought it would be appropriate to explain more about the process of crowdfunding and why it is a great option for startups to gain funding. The success stories are clear, with BrewDog raising ￡72,754,050 on Crowdcube. But that’s just the tip of the iceberg; Revolut, AllBirds, Oculus and Popsocket are all examples of crowdfunding success stories.

So, what is Crowdfunding?

Crowdfunding is essentially the opposite of the mainstream approach to business finance. Conventionally, if you want to raise capital to start a business or launch a new product, you would need to write up your business plan, market research, and prototypes, and then introduce your idea around to a limited pool or wealthy individuals or institutions. These funding sources include: banks, angel investors, and venture capital firms, limiting your options to what seem like only few key players. You can think of this fundraising approach as a funnel, with you and your pitch at the wide end and your audience of investors at the closed end. Fail to point that funnel at the right investor or firm at the right time, and that’s your time and money lost. We have seen this occur first-hand throughout our early days of searching for possible investors.

Crowdfunding platforms, on the other hand, reverse the funnel. By giving you, the entrepreneur, a single platform to build, showcase, and share your pitch resources, this approach dramatically streamlines the traditional model.

As a startup with a small team and limited resources, having to spend months sifting through your personal network, vetting potential investors, and spending your own time and money to get in front of them. With crowdfunding, it’s much easier for you to get your opportunity in front of more interested parties and give them more ways to help grow your business, from investing thousands in exchange for equity to contributing ￡10 in exchange for a first-run product or other reward.

Benefits of Crowdfunding:

Reach?– By using a crowdfunding platform like Fundable/Seedrs/Crowdcube, you have access to thousands of accredited investors who can see, interact with, and share your fundraising campaign.

Presentation?– By creating a crowdfunding campaign, you go through the invaluable process of looking at your business from the top to bottom—its history, traction, offerings, addressable market, value proposition, and more—and boiling it down into a polished, easily digestible package.

PR & Marketing?– From launch to close, you can share and promote your campaign through your company’s social media and email newsletters. As your business and hopefully other media outlets cover the progress of your fundraising journey, you can double down by steering traffic to your website/app and other company resources.

Validation of Concept?– Later on down the line, dealing with traditional investors will probably be inevitable. But a successful crowdfunding campaign can act as something like a portfolio to show these would-be investors.

Efficiency?– One of the best things about online crowdfunding is its ability to centralize and streamline your fundraising efforts. By building a single, comprehensive profile to which you can funnel all your prospects and potential investors, you eliminate the need to pursue each of them individually. Instead, you can present everything online in a much more accessible format, leaving you with more time to run your business instead of fundraising.

The ability for us to crowdfund on Seedrs gives us the capability to promote ourselves to a plethora of investors that we would never have dreamed of being able to access. This has given us a huge opportunity to successfully launch the business of Secnd. With now over ￡1 billion invested on Seedrs we are excited to propose Secnd to the thousands of verified investors across the platform. It’s time to get excited!

The legal bit: Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. Learn more here: https://lnkd.in/dP5wbgUN