Crowdcube: Darren Westlake
The founder of the crowdfunding site on introducing a new model of micro-investing to start-ups
Tell us what your business does:
Crowdcube is a web-based service that uses crowdfunding to empower start-ups to raise money from micro investors.
Where did the idea for your business come from?
As an entrepreneur myself, I have seen how difficult it is for start-ups to raise money – I wanted to help other new businesses to raise finance.
The idea came when I was watching Dragons' Den and I really wanted to invest a small amount in one of the business pitches I saw. I then thought about building a platform for micro investors to do just that.
How did you know there was a market for it? What's your USP (unique selling point)?
From my own personal experience of raising finance, and from witnessing others go through the same problems, I knew there was a market for the platform. Our USP is that we are the only crowdfunding service that allows businesses to raise money in return for equity.
What were you doing before starting up?
I have set up and run two businesses previously, both in the telecoms industry.
Have you always wanted to run your own business? What appealed most about being your own boss?
Yes, since I was a kid. The most appealing aspect of being my own boss is the ability to control my own success. It's great getting up every morning knowing that what you do makes a difference to you directly.
What planning did you do before you started up? What advice did you seek?
We put together a basic business plan. We also approached a solicitors' firm because we knew it was essential to take legal advice early on. It has taken us two years to develop the business model as it is now.
How did you raise the money? How easy was it? Did anyone reject you?
We've bootstrapped. We used some money from friends and family, but it's really difficult as a small business to raise finance. More recently we've been speaking to a business angel and we're close to securing a deal.
What challenges have you faced and how have you overcome them?
The biggest challenge we've faced has been finding a model that works within the financial regulations of the UK. I was fortunate enough to find two good advisory firms who assisted us with the finance model. Business finance hasn't really met the internet properly yet but this is a brand new model we've come up with.
Where is your business based?
Our offices are based in Exeter Innovation Centre at the university – it's a great place to network with other businesses in the area.
How have you promoted your business? What has proved successful and what won't you do again?
Initially we just used social networking as we were keeping costs down. We have an active online community on sites like Twitter and Facebook. More recently we've been using PR to promote ourselves.
How much do you charge? How did you decide this?
We take a 5% commission on any successful fundraising bids. The companies that use the site must raise the full amount otherwise they don't get any of the funding.
We figured out our numbers and realised what we needed to charge to make a profit. We didn't want to charge people upfront, but only once they've raised the money.
What has your growth been like?
We've only just started so it's too soon to say!
What's the impact on your home life been like?
I think working for yourself gives you a good home work / home balance because you can work more flexible hours.
What would you say the greatest difficulty has been in starting up?
It's been trying to find a working business model – the main difficulty has been getting round the legislative framework.
What was your first big breakthrough?
The key to making this work is bringing traffic to the website – exposure will help us do that and it will let start-ups know about our platform.
What would you do differently? i.e what have you learnt?
I would have started earlier – it takes a while to convince yourself of an idea. But actually our timing is pretty good because at the moment it is so difficult for businesses to raise funds.
What advice would you give to budding entrepreneurs?
Plan your business carefully – make sure you write a detailed business plan. And be 100% committed. If you're in a full time job you have to take a leap of faith if you want your business to work.
Where do you want to be in five years' time? Do you have an exit plan?
There is no definite exit plan – we need to focus on what we're doing now. In five years' time we want to have turned-over £5m.
We've already had some interest from people in other countries who like our model – so who knows where it will take us!