In 2013 Mark Suster a leading VC investor and Clayton Christensen a leading business author sat down at Startup Grind to talk about disruptive innovation and startup investment. Their conversation touched briefly on the subject of equity crowdfunding. Both Mark and Clayton are extremely cynical about equity crowdfunding. Some of their concerns are sensible questions about an emerging industry. But what they were secretly doing was arguing for the old model. I’m a big fan of Mark’s blog and Clayton’s books but they’re wrong about the disruptive potential of equity crowdfunding.
By betting against against equity crowdfunding, Mark Suster is betting against the internet. I believe the internet will do the same thing to early stage finance that it does to all industries. Namely, make them more competitive, connected and democratic.
Seedrs provides a tool that startups can use to raise capital from their friends, family, customers and the crowd. This process is often called “equity crowdfunding” because it’s like Kiva or Kickstarter, except that the investors get equity in the company instead of a product or a loan. In January 2014, I joined Seedrs as part of the marketing team.
At the end of last year, Seedrs raised 2.58 million pounds from over 900 investors using their own platform. That means that in my new marketing role, I now have over 900 bosses. I feel very accountable for the success and growth of the business. In this blog post, I want to share two main things about my new role, the expanded view of marketing that we’re taking at Seedrs, and the way that we’re incorporating lean manufacturing habits and processes into our team culture.
Equity crowdfunding is a new way of raising capital for startups. Kickstarter has proven a successful model for crowdfunding an idea (by pre-selling the product). Equity crowdfunding takes this further by allowing the crowd to buy shares in the company itself. The volume of alternative finance for startups, entrepreneurship and innovation is growing rapidly.
Crowdfunding is a delicate balance of describing the product, the team, the business and the investment opportunity. Each of these need to be communicated in a clear, compelling and persuasive way. Often the teams with the best technical skill are not the best communicators.
Lance Wiggs is raising a fund to invest in high-growth tech startups. He’s ex McKinsey and has been working on the Better By Design programme for a few years so he’s a super smart guy. I’m excited about his journey but he’s made some mistakes along the way that we can all learn from. There are lessons in this story for all of us who are involved in capital raising for early stage companies.
It’s useful to compare a few of the new ways that early stage investing is happening around the world. Angel syndicates, follow funds and accelerator funds are some of the most interesting ways of investing in startups today. They all put a layer between you and the startup that you’re investing in. But for lots of investors that’s a good thing.
This is a guest post from my friend Tim Gouw who is a co-founder of the Dutch innovation agency Goweekly. Tim and Maarten have been working with clients on innovation, service design, business design and recently they’ve been helping clients with crowdfunding campaigns.
They got started in crowdfunding when they raised 250,000 Euros to help save a a group of local bookstores. I’ve invited Tim to share the things that he learned from the campaign as they’re relevant to equity crowdfunding and also to general community building.
To aryrow a business you need a steady stream of customers and investors because cash-flow is the lifeblood of an enterprise. Yet lots of people around the world still feel uncomfortable with business development, marketing and pitching to investors.
In Silicon Valley there is a saying that the perfect combination of skills for a startup is a developer, a designer and a hustler. Often under appreciated, the hustler is responsible for ensuring that the business has a steady and increasing cashflow. The role of the hustler could be taken by someone with training in marketing, sales or finance. The art of the hustle is really just a combination of clear communication and hard work.
New York and London have a lot in common when it comes to finance, fashion and technology startups. The startup cultures in both cities are focussed on building real businesses not just the latest flashy social mobile apps.
Recently I’ve been in New York checking out the startup scene with VentureOut New York and UKTI. Keith Moses from UKTI and Brian Frumberg from VentureOutNY were our hosts. It was a great trip with an exciting group of startups. We had a full programme of events, meetings and visits. We kept a frenzied pace and I learnt a lot about the startup culture in New York.
As part of our work for the Innovation Warehouse, I’m travelling to New York with a cohort of startups from London. UKTI have helped pull together a group of exciting new businesses from London’s Tech City to take to New York for a modern version of a trade mission. The startups are going to pitch for investment and meet new customers.
VentureOutNY is run by Brian Frumberg (and team) to promote New York as a first port of call for overseas startups expanding into the USA and raising capital from American investors. Over the course of the year, they have had events welcoming startups from all over the world and they have dedicated events coming up for startups from Brazil and Portugal.
Converge+ is evolving fast from a one-off startup event into an enduring programme of evening events, workshops and conferences. The last Converge+ event of 2012 was held at the Wayra startup incubator. Wayra is a Telefonica backed startup space just off Tottenham Court Road (at very the north end of Soho). The mature creative neighbourhood of Soho has a very different feel to the startup tech scene in Shoreditch where we’ve held our previous Converge+U events.
Wayra has around nineteen startups involved in their programmes. The space has a mix of open-plan and breakout spaces. It was opened by Boris Johnson and has hosted dozens of exciting events so we were humbled to have access to the space. Ashley and the Wayra London team were great hosts.
Barclays and Central Working recently launched their new Knowledge for Growth event series with an “unconference” event to talk about how startups and blue chips can learn from each other. The Knowledge for Growth events are part of Barclays move to support the startup community in London. The main event was on 7 December at Google Campus in Shoreditch.
Barclays have formed a long-term partnership with Central Working and will be doing lots more to get involved with the startup community. They already have a small team that hangs out at the Shoreditch Central Working venue and they are working on streamlining their products to suit early stage startups (personally I’m hoping for Xero integration).