Finance Rebecca Smith · 16 October 2015
eMoov CEO: How I ran a successful crowdfunding campaign
What were the key challenges? You have to be prepared to work hard. Around a third of my time every day was devoted to the campaign. I had to answer lots of questions from investors and also through the investor forum on our Crowdcube page. I made it a policy to answer every question myself. Im sure it’s rare for the CEO to do that, but I think it’s one of the reasons why we succeeded. People could see that it was me responding. There were also some very challenging questions which I felt only I could answer. One weekend, a guy asked me nine questions one after the other. It took up my entire Sunday afternoon. But, because it was a public forum where anyone can go in and see it, I wanted to make sure that I was answering questions swiftly and in convincing detail. People were questioning the valuation and the business model and I had to work hard to convince the crowd that were watching those debates unfold in the forum. Ive been asked whether I had answers prepared, but I think if you have to prepare answers, you don’t know your own business and that, for me, is a reason for someone not to invest. Was there ever a moment when you thought “oh my god, are we going to hit our target”? In crowdfunding you encounter a phenomenon called “the valley of death”. it’s pretty horrible. Once you get to about 65 per cent, which we did in our first week, you get a reduction in the amount of people investing. The reason is that all the people, your friends, family and staff that you had lined up early have already invested. You then get all the “fence sitters” who are thinking that it’s an interesting campaign but want to see how well you do. We ended up in this vicarious circle where we seemed to hit a brick wall when we reached between 65 and 70 per cent of our target. You think you’ve really worked hard and then one day you’ve only raised 400 and you’re thinking crap, what’s going on here? Are we going to get to 100 per cent? What am I going to do? You then have to double up your effort, dig back into your personal network, back into the big tin, ramp up social media, and really push. When did you see the light at the end of the tunnel? It took us ten days of working hard every day to convince more and more people to invest, but slowly the momentum started building again. Once we got to 85 per cent it started to get a lot easier. By the end of week two, we reached 100 per cent and it was a real elation. You feel you’ve proven your concept and validated your valuation and so on. From there, you can take your feet off the peddles a bit and let things coast. You still answer the questions, you’re still being diligent and still applying yourself to overseeing and nurturing the campaign, but once you have that momentum it literally becomes a herd mentality and that’s when we got some really big chunks. Once you reach this milestone and investors are worried that you’re going to close the round, it is the fear of missing out which drives them. We could have closed the round at any time but we made the decision to continue to the end of the 30 days. The last week of the official campaign was incredible. We had VC from Switzerland ring up, Startive Ventures. I spoke to him for a few minutes, answered a few email questions and he invested 250, 000. And then we had a series of big investments from someone connected to the Royal Family. Because of the momentum we had, once we got to the end of the campaign, Crowdcube persuaded us to keep it open for a further week. In that last week, we raised another 300, 000 to end up with 2.6m. Why should businesses consider crowdfunding? Firstly, you don’t have to approach lots of venture capital firms. When trying to persuade one out of a sea of dozens to invest in you, you have to kiss loads of frogs to find your prince. With crowdfunding you’re asking lots of individuals. There is a propensity, albeit at smaller numbers, that you are going to get a lot of participation. I think it’s easier to convince the crowd than a VC.
ABOUT THE EXPERTRebecca Smith
Rebecca is a reporter for Business Advice. Prior to this, she worked with a range of tech, advertising, media and digital clients at Propeller PR and did freelance work for The Telegraph.