Online estate agency eMoov.co.uk recently closed a crowdfunding campaign which ended up being the fourth biggest equity share raise on Crowdcube. CEO and Founder Russell Quirk spoke to Business Advice about how he managed it.
When did you decide opt for crowdfunding?
I first considered it in January as part of our previous fundraising. But that round ended up being oversubscribed with institutional money. I resurrected it when it came to thinking about the next round.
How long before the campaign do you have to start the preparations?
It is important to start the preparations a couple of months before the campaign starts, but the real work is in the month leading up to it. The first step is to see the platform in our case it was Crowdcube, and talk about your proposition. You spend a week talking about what you are doing, discussing your valuation, and thinking about the amount you want to raise and whether you want to overfund or not. We then took a week to write the pitch. Ours was a very detailed document about the background of the business, current investors, the solution to the problem your business is solving, and the financials. Crowdcube are very hot on their due diligence so what you say must be true. You can’t just say that you are going to float on the stock exchange in two months? time at a valuation of a billion pounds. Your forecasts have to stack up and it must be quantifiable and justifiable.
What else was involved in the lead-up to the campaign?
In addition to the pitch, the video is very important and Crowdcube encourage you to do one. We spent a lot on ours. We had three and half minutes to put across our history, the size of the market, our traction and where we wanted to go in terms of the exit strategy. We needed about ten different edits to get it right.
The real “secret sauce” is making sure that you are warming up the people you know whether that’s existing investors, your own personal networks, customers, or staff. We approached them three or four weeks before we went live. it’s very important to get those people lined up. We went live on a Friday and reached 55 per cent of our target by the Monday morning. That was all from what we engineered through our existing contacts.
What promotional activities did you do during the campaign?
We held three investor events. I made it less about presenting the business and much more about the team, which I believe is very important in any business. I introduced them and encouraged questions from investors. Each event lasted two hours and only 10 minutes was spent on the pitch. The rest was introducing the team and Q&As. Most of those attending the events ended up investing. We also had people attending the third event who had invested earlier in the campaign and decided to reinvest.
Our PR was very good. We were in all of the trade and business publications and our social media campaign was everywhere. We also paid a considerable sum for a four-week London underground advertising campaign. It was a risk because it’s a big outlay if you end up not hitting your target. It took some real cojones.
We reached out to our customers too. We hit our database with an invitation to invest and ended up receiving investments from several people who had previously sold their homes through us.
Read on to find out what challenges Quinn faced and how he addressed them.