Real Business spoke to JustPark last month when the car parking service had launched its ambition to secure an investment of 1m via Crowdcube, which marked its first foray into the buzzing crowdfunding space.
As the campaign has now come to a close, the company has secured a final sum of 3.7m, which is the maximum amount for SMEs under EU regulation, from 2,900 investors the largest technology equity crowdfunding round in UKs history.
Additionally, it’s the highest amount invested through Crowdcube, exceeding the previous top deal from Mexican restaurant chain Chilango, which raised over 2m through a mini-bond last year.
Talking to Real Business in light of the accomplishment, which sold 15.6 per cent worth of equity, founder Anthony Eskinazi, said: Our minimum target was to reach 1m, but we hoped for around 3.5m. With 1m, we’d have needed to raise again in a year to 18 months.
Eskinazi played down the record-breaking activity noting that it’s great for publicity but won’t have a material aspect for the business. We’ll measure success on hitting KPIs. Records are great for morale and customers, but our focus is growing the business, and solving the parking problem,” he said.
The 2,900 people that participated invested an average of 1,200 with the highest at 500,000 and the lowest at 10, while Eskinazi revealed other investments varied in the tens and hundreds of thousands, and said higher investors were invited into the company to meet the team.
Confidence in using the crowd was high in the beginning as the company surveyed ten per cent of users over a year ago to determine how comfortable they would be in buying shares, and the belief was further driven with BMW and Index behind it.
After a year of meticulously planning the campaign, Eskinazi revealed the launch was shaken a week before going live. Our pitch was going to include that we were EIS tax relief-eligible, but we were advised we shouldn’t include that, because there’s a strict grey area about whether JustPark complies,” he said.
The train was very much moving with Crowdcube, but as soon as we found out we had to pull EIS off the campaign, my optimism was completely shot. It didn’t help that my wife had just given birth to our second child either, so it was a crazy time. Because of that, I didn’t know what was going to happen and there was no precedent for a company raising this much without EIS.
As luck would have it, that didn’t deter investors, which meant the back-up plan of approaching Index Ventures for more money was stowed away as the crowd met expectations.
In terms of difficulties, Eskinazi said crowdfunding isn’t as straightforward as you would expect. A lot of people think with crowdfunding you make a nice video and raise a million quid in a week or two, but we’ve been planning the campaign for over a year to make sure the pitch was right and everything was in place; the legal frameworks, the legislation, the administration, that the numbers were accurate and it was fair reflection of the business.
Additionally, disclosure was another difficulty to come to terms with for crowdfunding. I was concerned that disclosing on public domain may give competitors more insight into the business and more confidence to compete with us. Obviously we raised enough and started the risk levels small, but I found it difficult not to disclose too much information.
It’s very public, so all my friends and family know how much we’ve raised, and so do suppliers. A lot of people aren’t comfortable and I understand why. But we want everyone to know our brand and if they have anxiety about where to park, we want them to think of us.
He commented on how useful it was to have Crowdcube involved, offering support and advice along the way. The team found that some of the investors were genuinely interested and asked reasonable questions, although others were out to use the forum for scaremongering, as Eskinazi revealed some were extremely inappropriate and would put you off investment for life.
Around one third of investors were existing JustPark users, and Eskinazi puts that down to the fact that the average customer rating is 98.5 per cent. They’ve had a very good experience, so when we offered the chance to be a part of it, they were excited and we used that momentum to meet targets,” he said.
“We had what I feel was the perfect cocktail of big well known investors in BMW and Index, combined with a loyal user base, a product that tries to solve emotive problem, so we had all the ingredients. Some campaigns only have a few of those and can only raise so much.
As a company with 30 staff, it currently has 22 job openings and has experienced around 1,000 applications on the back of the crowdfunding campaign. We’re going to concentrate on the product and marketing, developing an Android app, improving the ones for iOS, desktop and tablet. We’ll be growing the marketing team, so people will come to us when they have a fear of parking, just like they would sell on eBay or Gumtree, or buy on Amazon,” Eskinazi said.
Describing the company as an under-resourced business he added the investment will allow us to grow at rate never experienced before. Having operated since 2006, the team has only just scaled from five to 30 over the past year, but still boasts a startup culture .
As such, Eskinazi knows exactly the individuals he’s looking for to support that growth. I’d say they’ll need a degree of entrepreneurial flair, whether they’re a developer, in customer happiness or business development. They’ll also need to be a self-motivator and excited about the opportunity to make an impact. I think I’m right in saying everyone here genuinely enjoys coming to work. With their own chef, quarterly retreats and parties, it stands to reason that’s the case.
Elsewhere, with an army of almost 3,000 investors on board, the company is currently putting together a plan for them, but Eskinazi explained ultimately how involved they become is up to them.
Crowdcube co-founder Luke Lang, said: JustPark is one of a growing number of more established businesses to seek finance through crowdfunding. With JustPark already being backed by leading venture capital firms, we were not at all surprised in the level of interest from the crowd that this pitch received. JustPark was a fantastic investment opportunity and the results prove that.