How To Crowdfund Your Shop
17 Jan 2016
Crowdfunding has revolutionised the way startups fund projects and grow. With 98% of business plans received by accredited investors and VC’s being rejected, captial hasn't always been easy to come by. However, there are now 100’s of differnt crowdfunding platforms available to entrepreneurs, which are transforming the industry. From money for goods models such as Kickstarter and Indiegogo to money for business ventures models such as Crowdcube and Unbound, crowdfunding has become big business.
According to a recent report by Massolution, 2016 is the year the crowdfunding industry is predicted to account for more funding than venture capital. In just 5 years the amount raised by crowdfunded projects has grown from $880 million in 2010 to over $34 billion in 2015. If this trend of doubling year on year continues, it’s estimated it will reach $90 billion in 2017.
At Appear Here we see lots of entrepreneurs and start-ups use crowdfunding to raise money for their stores, from new pop-ups to permanent spaces. Not only are these campaigns useful for quickly raising funds for space and fit out, but they’re also a great way of raising awareness for the brand and building a loyal community around it. With that in mind, we chatted to 5 brands who've all launched successful crowdfunding campaigns to find out their advice for what it takes to make it a success.
Amount Raised: £765,000
Sourced Market is an artisan food market based in St Pancras station. After launching a pop-up Sourced Market in Old STreet Station, Ben O'Brien, the founder, realised they were ready to expand. They launched a crowdfunding campaign to raise £750,000 to secure two new sites in Victoria and Marylebone – which they reached ahead of the deadline. Ben shared with us his advice for success:
"The key to a successful crowdfunding campaign is momentum and to achieve this you need to plan your campaign properly before you start. First of all you need a great video and in the video you need to get your key messages across in the simplest way possible and in less than three minutes. You don't need a big budget but you do need to edit and edit again to make sure the end result is as clear and concise as possible.
Then identify your core audience – this could be friends and family or regular customers. You need to give this audience an advance preview of your plans, offer them some kind of unique reward in return for being early adopters and supporting you first and have them lined up to back you on day one so your campaign gets off to a great start.
Your second round audience is likely to be the registered users of the crowdfunding platform you are using. Work out best how to communicate with them (they may be more motivated by the potential financial returns). A successful campaign will then require attracting a wider audience via social and traditional media and this audience will be attracted by the buzz and momentum that you have already created. If you are successful in getting to this stage and can get to 50% of your target in the first few weeks of your campaign then the chances are very good that you will get all the way to closing!"
Good and Proper Tea
Amount Raised: £140,000
An expert in crowdfunding, Good & Proper Tea launched an equity crowdfunding campaign on Crowdcube to raise £140,000 to build new stores. Founded by Emilie Holmes in 2012, she was initially able to quit her job and launch Good & Proper tea after raising £14,682 on Kickstarter, which helped her create a website and new tea products. Emilie’s top tip is:
“Keep your video is short & snappy, with a very clear message. You want people to watch it, quickly get what it is you want to do and then share it. So even though you might have lots of amazing things to talk about and big plans for the money, try to distill it all down to one or two simple thoughts, so people watching it quickly understand what it's all about. If they want to know more, they'll read your blurb. And most importantly, be in it – often it is as much about the people and passion behind it as the idea itself..."
Knots and Socks
Amount Raised: £20,890
Knots and Socks sells colourful ties and socks from two British born brands: Reef Knots and Morrow’s Socks. After trialing a pop-up shop in Putney Exchange, the duo decided they were ready for a permanent store. They launched a crowdfunding campaign to help them secure a space in Leadenhall Market and in a couple of months they'd raised the £20,000 they needed. The co-founder, Patrick Dudley Wiliams, advised:
The video is 100% key. You’ve got a handful of seconds to draw people in and if you catch them, they’ll probably watch the whole thing. That increases their chances of getting involved hugely. Make it professional looking, personal and get the rough point across very quickly. Depending on what you're raising money for, try to get an emotion from the viewer. We focused on it being fun. We also followed it up with an outtakes video a few weeks later.
Another thing to consider, you need to rank well in the crowdfunding website’s search results, so find out what gets you to become one of the top trending pitches. It might be posting updates, adding photos, but give yourself the best chance to get noticed.
Amount Raised: £16,500
Alex Hely-Hutchinson, founder of 26 Grains launched a kickstarter in June 2015 to help raise funds to fit out her new porridge cafe in Neal’s Yard, Covent Garden. She successfully reached her target of £16000 in 1 month thanks to her loyal community of porridge lovers. Here’s her top tips for making it happen:
If you crowdfund, make it your focus for the length of time that the campaign is running. It's a leap of faith by your investors and it’s important to be present and available to answer questions and show dedication to raising the funds.
Be realistic, if you're going to crowdfund, make it count. So if the amount needed is high, but you've done the research, show your case and go for the amount that you really need. Similarly, asking for too much might undermine your campaign.
Post regular updates, for both those who have invested and to interest potential investors.
Hype hype hype before the campaign goes live. Meet with all potential investors and spread the news that your crowdfunding is going live ahead of day 1.
Amount Raised: £288,560
Grub Club helps chefs and aspiring foodies deliver pop-up experiences and supper clubs. They decided to use crowdcube to raise £250000 to improve their website and expand internationally. In just 40 days they reached their target of £250,000. £100,000 of which came from their own database, after they sent out a newsletter announcing the campaign. Co founder, Olivia Sibony shared with us this key piece of advice:
Your video is one of your key assets. Plan it very carefully with a storyline that is engaging and invites people to be part of the dream vision you are aiming for. It's also important to have a logical flow which embeds the story of how you got to where you are, what you are planning to do with the money, and what the outcome will be after the money has been spent: i.e. what change will the investor see and what's in it for them.