Crowdfunding - an interview with Tom Britton, co-founder Syndicate Room
I've had the great pleasure of asking Tom Britton, co-founder of Syndicate Room, to answer some questions about crowdfunding. We all know that crowdfunding is the latest "buzzword" of alternative finance - here are some tips from a man in the know!
Firstly Tom, thank you so much for your time. Tell me a little about yourself:
I grew up in Los Angeles to an American mother and Scottish father so I got to spend time in the UK over summers and when I was done with my undergraduate degree I decided to move over and try my hand at playing football. The life of a third division footballer is probably as glamorous as it sounds, i.e. not glamours at all and to pay the bills I took up a job pursuing my second passion technology. A few years working for someone else made me realise I didn't like working for someone else so I headed back to school and was studying for my MBA when I met Goncalo who introduced me to the concept of crowdfunding and his vision for what would become SyndicateRoom. We worked on the business while I was finishing the masters and then in September of 2013 we launched it to the public and have been growing it ever since.
In language an 8 year old can understand, explain Crowdfunding!
Crowdfunding enables companies to raise money from everybody from friends and family to business angels and venture capitalists. Think of your campaign as a shop window not just for the goods you sell but for your business itself. When done correctly, a crowdfunding campaign doesn't just raise capital but builds a community of invested people around a business.
Are all business suited for Crowdfunding? If not, which sectors / industries / types of business are and aren't?
Most businesses can be crowdfunded, regardless of if they have a product that investors are ultimately able to buy. So long as the business is not doing anything deemed inappropriate, they could create a campaign. The type of crowdfunding that the business decides to use may be influenced by the type of business as will the stage of the business.
Businesses selling consumer goods or services may opt to do a rewards based crowdfunding campaign early on because they can effectively pre-sale their goods without giving up equity. Non-consumables may find it harder so will look at equity crowdfunding first as will later stage companies.
What should businesses considering Crowdfunding be wary of?
The amount of work that goes into the campaign before it actually starts. Businesses need to prepare incredibly well and build up their investor interest long before the campaign starts. The best campaigns do this, they build momentum before they actually launch the campaign and then absolutely kill it in the first few days. Most platforms will recommend businesses have anywhere between 30-50% of their funding already lined up so that as soon as they open the money pours in and the momentum builds off of that.
Most platforms provide some level of assurance to the investors by vetting the businesses. How can a business best prepare itself for a fundraise?
Take it seriously and build your campaign as if you were presenting to business angels. The crowd is more sophisticated than most believe so don't think you can get away with shortcuts. If you've got the business model canvas use it as a template from which to build your pitch.
If there was one thing you could tell every business looking to crowdfund, what would it be?
Running a crowdfunding campaign is a full time job. Don't underestimate the amount of effort it's going to take and don't be disappointed if it doesn't work out. Some sources say that less than 30% of crowdfunding campaigns hit their target.
I have to thank Tom massively for his words of wisdom here - my main takeaway is that preparation is key: as with all fundraises, there are no shortcuts.
Let me know if there are any other areas that you would like subject matter experts to help with!