Finance · 24 May 2016

When passion inspires you to set up a business, can it sustain you?

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Can passion alone sustain a new business?

In his latest column for Business Advice, equity specialist and Crowdcube CEO Darren Westlake reveals his joy for building and selling businesses, and asks if passion alone can sustain entrepreneurs as startups grow.

People often ask me what inspired me to set up Crowdcube five years ago. I launched my first business in the mid-1990s, followed five years later by another startup, both of which I subsequently sold.

My experiences of building and selling businesses was the inspiration for setting up Crowdcube, but the real passion for me came from knowing how hard it could be to raise money, and I wanted to find a way of making investment more accessible and more affordable for others.

This passion or drive for setting up a company, which often involves walking away from a very stable and financially rewarding career in the first place to step into the unknown, is something we see every day at Crowdcube. Amazing people with amazing ideas approach us, wanting to raise money from others who will also share their passion for the business.

Just this week, we saw Pavegen, a hugely successful British “cleantech” business, launch its latest floor tile technology, which generates electricity just through people’s footsteps. Founder Laurence Kemball-Cook set up the business shortly after leaving university, armed only with a passion for his clean energy idea, which he came up with studying industrial technology and design, and a strong network of family and friends willing to support him.

Laurence said that his product needs the power of community to make it work – people walking over the tiles to make it produce renewable energy – and this seemed fitting for an investment round on Crowdcube, harnessing the power of the crowd to help the company grow. Pavegen is now installed in over 30 countries around the world, counting the likes of Adidas, Sunglass Hut, Ford, Siemens and GDF Suez as customers.

Ben Pugh, founder of Farmdrop, an online marketplace that allows people to buy fresh food direct from the best local farmers and producers, is another with a passion for sustainability. A former stockbroker, Pugh dreamt of capturing the sustainable simplicity he’d experienced on sailing trips when he would catch and eat his supper every night. Pugh is now on a mission to fix the UK’s industrialised food supply chain – giving independent producers a fairer share of the revenue from the sale of their food and closing the gap between supplier and buyer.

Pugh also admits that the death of his mother in 2012 gave him a new perspective on things and it was shortly after this that he decided to quit the world of finance to make his idea a reality. For him “Farmdrop is a mission-driven company” and he believes “that lots of people would want to invest in a business that was founded on a purpose to improve access to local food and create a more sustainable food model.”

At Crowdcube, we are certainly seeing a demand by investors for so-called “sustainable investment” and this area of the business is growing year-on-year, with six cleantech firms already funding this year.

WITT Energy is just one of those businesses that hits the brief exactly and has been described as “one of the most exciting developments in renewable energy and truly groundbreaking”.

The inspiration came in 2012 when engineer Martin Wickett was playing with his watch, which he knew harvested energy from moving his wrist up and down or left and right, and he thought that in the same way he should be able to harvest energy from any sort of natural motion. This passion for the technology from the WITT team has seen investors enthusiastically backing the business to the tune of over £2.4m on an initial target of just £750,000, and attracting over 1,500 investors.

The fact that people’s passion shines through, regardless of the sector product or purpose, is crucial and it’s important to get this across during the fundraising process by communicating and appealing to your potential investors to share that belief.

A simple concept, well executed and with passion is exactly how the founder of Sugru, the world’s first mouldable glue, appealed to the crowd. After reaching its £1m target in just four days, one of the fastest raises, the business then went on to become one of our biggest raises, attracting over £3m, and one investor who put in a single investment of £1m.

Finally, we can’t write about this without mentioning Tom Blomfield, CEO of Mondo. Mondo recently raised £1m in just 96 seconds on Crowdcube (alongside Passion Capital’s investment of £5m) and is part of the wave of fintech businesses challenging the UK’s financial services sector through its smart use of technology and customer-first attitude.

Blomfield not only wanted to challenge the old banking establishment, but also to become the first bank ever to allow its customers to become shareholders through a crowdfunding platform, essentially asking them to help build the bank from the ground up.

There are so many more examples of where passion and belief has helped to create a business, in our experience anyway, and it’s clear from our role as a crowdfunding platform, that this same passion will go on to sustain it as well, as they go on to achieve remarkable things.

Read more from Darren Westlake on how to develop a successful investor relations strategy.

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ABOUT THE EXPERT

Darren Westlake is the co-founder and CEO of Crowdcube, an online platform that enables startup, early and growth-stage businesses, from a range of sectors, to raise finance with the added benefit of being backed by the crowd.

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