The founder of Madrid-based mobile app Wave guides Business Advice readers through his experiences using equity-based crowdfunding to scale his startup.
Wave is the Madrid-based mobile app which makes meeting friends and family stress free, using geolocations to share private maps.
Four years since launching the app, co-founder Luis Gelado is continuing to improve Wave’s location service and the company recently exceeded its latest crowdfunding campaign.
Business Advice caught up with Gelado to find out how it all started, the benefits of crowdfunding and future plans for Wave.
What is Wave?
Wave is a free app that helps people easily meet by sharing their live locations on a private map. It is a useful tool to find friends or relatives especially in places where it’s difficult to meet such as busy streets, music festivals, new cities, ski resorts or wide beaches. Although the most common use is simply meeting to chill because it makes the process easy, effective and fun.
To start a session, users simply select one of their contacts, choose the Wave duration and finally send a request. As soon as it is accepted they can spot their friends in real time, set a meeting point, navigate inside the app, chat and share audios and videos. Wave has more than 11 million of users worldwide and daily traffic from more than 150 countries.
How was the business initially funded?
Wave’s adventure began to take shape in 2014 when we realised there was no effective real-time and private location tool in the market. We started with our own savings and some FFF (friends, family and fools) investment to start off.
Shortly after we got into the Plug and Play and Facebook’s accelerator programs, which helped us manage this first phase of the project. Wave was first published in 2015. Since then, we have closed five more financing rounds, two of them equity crowdfunding with Crowdcube in the UK, and our Series A with two Spanish institutional investors. Our latest crowdfunding campaign was a hit, exceeding on its first day the target of £500,000 and raising in total £845,980, backed up by 597 investors.
How did you meet the funding target?
We already knew how a crowdfunding campaign works, so we prepared a groundbreaking pitch, based on the growth of Wave since 2016: a retention rate of 80 per cent, a user base that has grown from 3.5 million users to more than 11 million and a new source of revenue.
The idea of starting a new crowdfunding campaign was not casual. It is important to remember that the approach you take when you open your pitch to investors is different than the one you take to knock on the door of investors you already know.
Of course, you can use both strategies, but talk to your current investors and then connect through the crowdfunding platforms with new ones, as we have done.
To accomplish our crowdfunding campaign we have worked hard to prepare the documents we knew were important, such as metrics documents, business plan, product and company vision, etc.
We have also developed our video pitch in which we have talked about what stage was the company was at, how we accomplished our KPIs and what we expected from the campaign.
In short, it was a pitch based on the trust of many of the investors who had already trusted us in 2016 and those who agreed to invest in this new opportunity.
During the campaign, we were fully dedicated to resolving the doubts and inquiries of hundreds of investors that reached us and we used our own social networks to promote the campaign and gain social visibility.
Did you choose reward or equity-based crowdfunding? What was behind this decision?
In our case, we have chosen Crowdcube’s equity-based crowdfunding because it has worked great in the past and because it has a type of investor that seems very suitable for our project.
For the first time, in our campaign the new investors acquired shares in Wave under the same conditions as the rest of our private investors within our Series A. It made more sense as we don’t sell products or services. We just want to deliver the best location service out there and share our success with our users.
Would you recommend this type of funding to other businesses?
Definitely, crowdfunding campaigns have opened the door to many interested investors and generated hundreds of thousands in investment that will help us scale to the next level. It has not been an easy road, though. It involves self-criticism, thoroughly reviewing where the company is, and establishing realistic KPIs so that we can show results in a few months and prioritise some developments over others.
As for the platform, we personally liked how easy to use Crowdcube was, it has managed the campaign and helped us connect with thousands of entrepreneurs and investors. You need to deliver hard work during the process, but it’s definitely one of the best options to raise capital for SME companies.
Where would you like to see the business in the next 12 months?
Wave is a geolocation tool for daily use, so our goal is to be on all smartphones in the world. This is not an easy challenge and we know that we must continue innovating in real time location to be the most reliable service.
When we develop our product we need to improve our service, by developing and adding new features that our users demand. To give you an example, this week we have launched two new features: the ability to navigate to any address within our app and a direct access to private transportation through the Uber service. Those two are features complete the experience of location, so we are eager to keep on offering more services on Wave.
Finally, our third focus is improving our UX design and adapt it to what is trendy and what our community is demanding. To accomplish this goal we have a strong team of designers and the talent of our advisor, the creative director of Pinterest.
As for the company, in addition to improving the product as we have mentioned, we have opened a new line of B2B monetization, in which we sell and adapt our native geolocation technology to other companies that need it. Transportation, security, logistics, and many other markets are demanding efficient location services to improve their daily operations. That is why we will continue adding talent to our team in the following months.
In the early stages, the pitch is everything. The trouble, of course, is that it’s far from simple. Making sure your pitch captures the imagination of would-be investors requires significant effort, preparation, and foresight.
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