Starting on a shoestring: How I’m raising finance – from a garden shed
Pippa Murray shares the trials and tribulations of crowdfunding as she plans the next stage for her burgeoning business
I’m now six weeks into the three-month stint in the Escape the City shed (read about why I’m living in a shed here) and, despite it feeling like home, I’ve started plotting how I intend to escape from said shed.
So as part of my escape plan Pip & Nut is going live on Crowdcube.
An exhilarating way to raise finance
With the product and brand taking shape and the first full production run scheduled to happen at the end of October I now need to raise the funds to complete this production run, as well as market the brand and maintain working capital as the company grows. With two months to raise £100,000 it’s going to be an exhilarating ride.
Now, 60 days initially seems like a fairly lengthy period of time but as most crowdfunding platforms will tell you, the success of your campaign very much depends on the groundwork you lay prior to launching.
Crowdfunding tactics: The ‘pre-follow ship’
In fact, Crowdcube suggest that you need to bring with you between 30-40% of the investment from your own crowd in the first couple of weeks that the campaign is live. This is so that your network contributes a fair proportion of the money in order to then encourage their crowd to follow and get you up to that all-important 100% funded mark.
Dom Jackman, one of the co-founders at Escape the City, called this their ‘pre-follow ship’ emphasising that by creating a buzz around your business in advance and then playing up to the element of scarcity, once live, means that people are more likely to actually jump aboard and invest their money in your business.
Having an active and engaged network is critical. Luckily thanks to the nature of crowdfunding this network of investors can come in all sorts of guises, from friends and family to business partners as well as serial angel investors. I’ve been consciously building my network so that now that I’m at the point where my business is ready to go I can rally round everyone and seek to engage them in this next phase of my business.
The importance of listening to the crowd
But having said all this, even with all my careful planning and networking, there is still a huge amount of uncertainty involved. You’ll never be able to 100% predict how the crowd will move. When I spoke to Hajera Memon, founder of Shade 7 who successfully raised over £40,000 on Indigogo earlier this year, she emphasised that whilst meticulous planning is important so is the ability to be flexible and listen to the crowd in order to adapt the perks and offering according to what they are telling you.
And, rather than passively waiting for the money to appear in your bank account, you need to continue to look for ways that you can engage your audience and incentivise them to come on board.
Crowdfunding is by no means an easy option. In fact it takes some real nerve to put your business out there for the public to scrutinise.
But, what’s really exciting about it is that if you are successful in raising the money not only can you then go and make your plans a reality you’ve also got a broad group of people who are not only invested in you financially but also truly believe in your brand.