Local businesses with a crowd ? Oppo Ice Cream
Venture capital very rarely works for more-traditional companies. The venture capital model is all about picking the potential big winners ? the sort that might be able to go on to huge 100x exits. But what if you have a more ?main street? kind of business? Then what are you supposed to do? Non-technology companies can still be very good, worthy businesses – but venture capital firms just aren?t interested in funding them. Oppo makes indulgent, healthy ice cream ? a great example of the sort of business that equity crowdfunding can work well for. They raised over ?1.1m, across three separate campaigns. Founder and managing director, Charlie Thuillier, said that ?equity crowdfunding was a way to raise money from a crowd that we already had.? The ability to use equity crowdfunding to leverage an audience into investment money offers companies like these the ability to bypass the need for venture capital, and close the ?funding gap? which has been such a problem for them in the past.View this post on Instagram
The unicorns ? PavegenBut equity crowdfunding is also working for the really innovative technology companies ? the kind that probably could have got venture capital funding, but still decided to do equity crowdfunding because of the advantages that it offers. Take Pavegen, which raised ?1.9m on Crowdcube. Pavegen makes a device which is installed into walkways, generating electricity through the kinetic energy of human footsteps ? truly groundbreaking technology. Pavegen CEO, Laurence Cook explains, ?We are doing something no-one else has done. We have a vision to change the way cities operate in a way no other company does. We can really lay claim to be trying to change the world. So we have an incredibly compelling story.?
So, why did Pavegen do equity crowdfunding, instead of getting the money through traditional funding sources? Getting a better deal on the investment terms was a big part of it. ?The terms from venture capital are always restrictive?, says Laurence Cook. ?They want board seats, control, liquidation preferences, restrictive terms on the founders ? all things which don?t favour the company raising money.?
ConclusionsReaders might now be wondering how to crowdfund a business for themselves. Of course, a lot of effort goes into pulling off a successful campaign like the case studies mentioned above. The first step is to get clear on your objectives for equity crowdfunding ? are you mostly looking to achieve customer list growth, deepen connections with your existing business relationships, or is the capital itself the primary goal? Once that is clear, it comes down to identifying your investor avatar and building your crowd from there. But, for those willing to put in the work, the doors are wide open for UK startups and growing companies to access this new innovation in early-stage finance. Nathan Rose is the bestselling author of Equity Crowdfunding. He has appeared at crowdfunding events all over the world. Today, he runs the website www.startupfundingsecrets.io, to help startups and growing companies use equity crowdfunding to gain marketing exposure and raise investment money at the same time.
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