Cornerstone looks to channel Dollar Shave Club success following oversubscribed crowdfunding round
3 min read
22 July 2015
Having been set up by former venture capital professional Oliver Bridge in the summer of 2014, Cornerstone has capped its first year of operations by using equity crowdfunding platform Crowdcube to raise nearly £900,000.
The business, which provides male shaving products though a subscription service, set an initial benchmark of £500,000 for a 14.3 per cent stake in the company, but demand meant the fundraising was extended – with the end result being £898,210 for 23.06 per cent of the business from 246 investors.
Alongside casual investors who typically invest anywhere from £10 to a few hundred, Cornerstone attracted backing from former Jack Wills chairman Will Hobhouse and Charles Tyrwhitt founder Nick Wheeler. The largest contributor to the fundraising was an unmanned city banker who contributed £100,000, while one Taiwan-based individual added £25,000.
Bridge set up the company after becoming frustrated with products that provided an uncomfortable shave and deciding there should be an alternative to having to shop for products in person.
The subscription model, employed by businesses such as Spotify, Netflix and Graze, has been shown to be effective in the shaving market by Dollar Shave Club in the US – with its most recent funding round valuing it at $615m.
Bridge told Real Business that he felt an offering in the UK “felt natural” as a consumer, and that compared to Graze, which he stated “built a subscription business out of non-essential products”, shaving products are an obvious place to start.
Like Dollar Shave Club, Cornerstone combines a high-quality razor with shaving products – ones which Bridge created following product testing and consultation with dermatologists.
Luke Lang, co-founder of Crowdcube commented: “Cornerstone has done a fantastic job of inspiring investment from our crowd after raising over £890,000. This latest crowdfunding success is yet another demonstration of how investors, from across the board, are eager and willing to back great British businesses.”
Those investing in the Cornerstone crowdfunding round were offered a number of rewards – including a year’s free shaving supplies for a £1,000 investment, a gold-plated razor handle for a £50,000 investment and a cut-throat shave in a hot air balloon for a £100,000 contribution.
In its first year, Cornerstone has secured 5,000 customers and is now turning over £30,000 a month. Having recently hired new data marketing personnel, and with the support of well-known investors such as Hobhouse and Nick Wheeler, Bridge has plans to take his business international and include more products.
His approach is now “data-led”, with a focus on customer service seen as “really important”.
He did, however, have a warning for entrepreneurs considering using crowdfunding as a funding method. Despite companies such as beer brand Camden Brewery and transport technology JustPark showing that large amounts can be raised, he emphasised the importance of having big commitments ahead of launching the online pitch. “It’s a bit like asking someone to marry you – you need to know the answer to the question before you do it,” he added.