We recently pitched for £300,000 for 8 per cent of our group via equity crowdfunding platform Crowdcube. Unfortunately our pitch was unsuccessful, but we have taken a lot of positives and learnings from the exercise here at ParcelHero.
Around 60 per cent of all crowdfunding pitches fail, and we learnt very early on that crowdfunding is simply a platform that facilitates investors wishing to purchase equity in your company. Each crowdfunding site has a certain amount of active investors, but as crowdfunding is still very much in its infancy, the investor base is not large enough to give you a solid chance of reaching your funding goal without additional PR – therefore the pressure is on from day one to publicise the offering yourselves.
Read more on equity crowdfunding:
- 4 ways to launch a successful crowdfunding pitch
- How to make a great crowdfunding video
- Why crowdfunding isn’t dangerous
We did many things really well, but we also made a lot of mistakes. Although disappointed, our commitment to this exciting new form of finance has not diminished, we will turn to the crowd again and the next time we will be a lot more prepared and we are confident that next time around we will succeed. Here are some of the mistakes we made and the positives we have taken out of this exercise:
The five key reasons our Crowdfunding pitch failed:(1) We launched our offering in the summer when many investors were on holidays, so the low traffic to the site during this period meant our pitch did not gain momentum until we were well over half way through (2) When crowdfunding, it’s essential to raise the first 35 per cent as quickly as possible – once you do this investors have more confidence to invest and start to follow the crowd. We should have focused more effort on securing a number of strategic investors before the pitch went live (3) We focused a lot more of our time on the written pitch than the introductory video, we rushed it and did not commit enough funds to this part of the pitch. We have learnt that with crowdfunding the introductory video is absolutely key, it’s the first (and unfortunately often the last) impression the crowd will get of our campaign. We have learnt that after 30 seconds you have already lost one third of your viewers, the video needed to be a lot punchier and very quickly create an emotional bond (4) From day one we did not have a full PR strategy. We knew we would have to do some PR and outreach to our customers, but we over-estimated the amount of investors that would just find us and invest. We should have ensured we had as much PR as possible conducted in the first week of the pitch, or even before the pitch went live to build up the hype (5) In digital marketing, everything is measurable, but with crowdfunding sites it’s not. We had advertising campaigns on social platforms and also email marketing campaigns, but we could not measure how many conversions we made as a result of these activities because they were linking directly to the Crowdcube web site, rather than landing on our site, and therefore we did not know whether to increase our budgets or stop advertising and re-direct our efforts elsewhere. We have raised these concerns with Crowdcube and they are actively working to address this critical issue.
The huge positives we have taken from crowdfunding:
(1) We have raised our public profile and awareness of products and technology
(2) We have won a lot of new customers through the PR and promotional activity we have done around the offer
(3) We have offered shares to our employees and therefore gained a more engaged and passionate workforce
(4) We have ran a very successful promotion that’s resulted in 10 lucky customers becoming shareholders
(5) We have had a number of enquiries from companies wishing to licence our technology (One of these opportunities is so large it could negate the need for us to even raise any finance)
(6) We have had enquiries from companies that are interested in establishing a franchise of the ParcelHero brand in overseas markets
(7) We may still make our funding target, as we still have a number of investors who are interested in investing, but did not have time to complete their due diligence before the Crowdcube deadline
(8) We have learnt how to communicate our business model, USP’s and brand in a more direct way that’s easier to understand
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