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Finance Focus helps businesses navigate the ever-evolving world of finance. Each episode features expert insights, practical advice, and in-depth discussions on topics such as crowdfunding, trade finance, angel investing and debt. Hosted by Tracy Smart from The Smart Team and Sam Jones from Satellite Finance.
[00:00:00] Tracy Smart: Welcome to the Finance Focus podcast. I'm Tracy Smart from the Smart Finance team and I'm thrilled to be co hosting this with Sam Jones from Satellite Finance.
[00:00:14] Sam Jones: Hello! In this first series, we'll be diving deep into the world of fundraising. So whether you're a seasoned business owner or just starting out, our goal is to provide you with some practical tips to help you navigate the complexities of raising funds for your business.
[00:00:26] Tracy Smart: So stay tuned for expert interviews, engaging discussions, and much more. Let's get started.
[00:00:33] Sam Jones: Welcome everyone to the very first episode of the Finance Focus podcast.
[00:00:38] We are really excited to be here and to kick off the series with an incredibly relevant and dynamic topic, crowdfunding.
[00:00:44] Tracy Smart: So crowdfunding has revolutionised the way entrepreneurs and businesses raise capital and today we are thrilled to have two distinguished guests who have both raised money for their businesses this way. Please join us in welcoming Jeff Turrell and Tim Hammond.
[00:00:59] Sam Jones: Throughout the episode, we're going to uncover some secrets behind successful crowdfunding campaigns, explore various platforms, discuss the do's and don'ts of the innovative fundraising method and if there's enough interest, tell a finance joke!
[00:01:10] Tracy Smart: Did you notice if there's enough interest? Anyway, Jeff and Tim will share their invaluable insights and experiences, providing you with actionable advice and tips to help you through your crowdfund journey. So let's dive in.
[00:01:22] Jeff, let's start with a bit of context, tell us about your business?
[00:01:26] Geoff Turral: Thanks, Tracy. So, I'm one of the co founders of CarCloud, and CarCloud exists because you can manage every aspect of your life digitally, except up until now your cars. So, what we do is we make car management digital, so you can manage your cars on your laptop, on your mobiles, and the two things we're really doing is we're making sure that people can get to the lowest possible monthly cost of ownership, every month and in doing so they can take out the 80 percent of wasted time that goes with endless form filling each year with the same data being asked for yet again. So it's a simplistic save money, save time proposition and crowdfunding has been a really important part of our journey so far.
[00:02:04] Tracy Smart: Thank you and Tim, tell us a little bit about yourself.
[00:02:07] Tim Hammond: Good morning, Tracy. Yes, I'm Tim Hammond, the co founder of Pro Espresso and we raise crowdfunding to help us get the community together for our product, which is a subscription coffee machine and beans in the home and the reason why it was such an exciting crowdfund round was that to date, there's been a lot of professional sportsmen having these coffee machines at home and now we're opening it to the general public on a monthly subscription fee.
[00:02:36] Tracy Smart: why did you choose crowdfunding out of all of the options out there to raise funds, Geoff?
[00:02:41] Geoff Turral: So, the truth is probably like many founders, we're not finance people, we're not, certainly not investment people. So in truth, we stumbled into the lot. So we started the business five years ago and we stumbled into lockdown and we really stumbled out of it. So just in a survival mode and in that time, we had had lots and lots and lots of conversations with all sorts of people, primarily because they became available.
[00:03:03] Lockdown suddenly meant there's all sorts of people who wouldn't give you the time of day that suddenly were prepared to have a conversation because they were feeling a bit non essential to some degree. So we had lots and lots of financing conversations, but I learned two things really. One is it doesn't matter what you might be saying to someone about your business, if you're not their sweet spot, if you're not in the place that works for them, it's a totally wasted conversation. So, like so many things in life, there just comes a point where you think, okay, this isn't working, you have to take a stop and say, how do I get things back under control? How do I take things into my own hands? And I started researching crowdfunding. I didn't really know anything about it. I thought, well, okay, at the very least, it looks like it's a lot of work, but it will put the, I wouldn't say power, it's more the degree of control back into our own hands as a business. For it to be up to us, rather than it feel like, it's endless, endless, quite expensive conversations going to see people on trains and the rest of it to find out that it was never going to be a yes, never mind that it was a no.
[00:03:55] Tim Hammond: Yeah, I agree with crowdfunding it's more about, for the investors perspective, it's eyes on, hands off. Whereas if you're raising money from VCs and other private equity, they do want an element of control and I think with crowdfunding, you get the community investing and some of those investors may want to help and want to help out and then you get to meet them to take that conversation further, but you don't have to. So I think crowdfunding is great for companies that obviously, are majority owned by the co founders or the founder initially, who's at that stage where they're building it and they want advice, but they don't want someone else controlling it.
[00:04:33] Sam Jones: So how do you engage the crowd funders? So if you want somebody who's going to be putting money in, but hands off on the running of the company, how do you make your business or your proposition attractive to them?
[00:04:42] Tim Hammond: I think generally it depends on the conversations you're having because you do tend to speak to a lot of these investors and in fact, in our latest crowdfund round, and I've done a couple, two different businesses, with this particular business, the coffee machine subscription business, we had a lot of people who were already customers of ours that we knew who had our coffee machines. They may have been a pro athlete or someone that we knew personally and they're giving us their feedback anyway, but they're not necessarily wanting to help you run the business. They may be an ambassador that would spread the word about it and that's what you want, really, you want to use the crowdfunding as a PR exercise, as much as anything, to help advertise what you're doing to the bigger public at large.
[00:05:24] Tracy Smart: I think if you've got your own customers actually wanting to invest in the business, that's got to say something about what you're doing there as well, hasn't it?
[00:05:31] Tim Hammond: Yeah, and I think, when you're starting a business, you're trying to get as many customers as possible and what you don't know is how necessarily to expand to get the same customers as you've got because, I mean, they have online, on social media, a way of advertising for lookalikes, this is a lookalike of your customer, you know, you want to have as many of those customers as possible. So someone who's into coffee, maybe into the brand that we do on subscription, you want to find as many of those as possible and a great way of doing that is customer referrals. So by having them as shareholders in the business, then they're more likely to talk about you further and wider and generate your customer base further.
[00:06:09] Geoff Turral: And I think one of the key thing about crowdfunding is it gives you a platform. So I think our experience tends to be that, particularly in the UK or European funding environment, post the interest rate hike, it is tougher than it was and everyone listening to this podcast is trying to raise funds will know, it's much tougher than it was. So what do you have to do? You have to be more selective, and you have to create a sense of competition and time bound. So if it's not competitive and it's not time bound, you are going to get timed out, and you are going to have a situation with the best will in the world, a professional investor of VC/ PE needs to make sure that they can get you at the cheapest possible price, quite rightly. Now whether that's right for the business or right for the founder, that's something different, but that's their job, fair enough, that's what they've got to do. However, if you can create a time bound and competitive situation, then you can start to have some of that ability to move, to breathe, that's really important to a start up business.
[00:06:55] So, the first thing you've got to do is you've got to select a platform. So there are some platforms, I mean, historically things are changing a bit, but historically the two that you'd be really looking at were CrowdCube and Seedrs, were really the two and there are different reasons for going with one or the other, but broadly speaking, they probably wouldn't like to hear it, but from the investor side, they're doing similar sorts of things. They're allowing a casual, if you like, non professional investor to be able to look at businesses and in particular, make sure that the DD has been done. So rigorous about the DD, because it's a...
[00:07:25] Tracy Smart: Due diligence.
[00:07:26] Geoff Turral: Due diligence, yeah. So it's a financial promotion at the end of the day. So they're answerable to a bunch of regulators about making sure that that financial promotion is truthful and honest and they also want to look at the company and make sure that it's got legs, that they're protecting the interests of their investors, otherwise they won't have a business. So the, one of the key things was, there are a load of resources on both Crowdcube and Seedr. There's loads of resources that really help people make a decision as whether it's right for them because I think we both sound like we've both been through two crowdfunds and I'm very positive about the experience in terms of where it puts you, but make no mistake, people say it's another full time job, for me, it was about 60 percent more, but it's still a lot. It's a lot and the upside is that it's sort of like taking your business to the gym each day and I don't know about you, but I'm not a fan of going to the gym. It's a horrible thing, particularly as winter's coming in. But, you feel better for doing it and if you do it four months in a row, you have a much fitter business. So there is, there are some other, if you're like, off the ball...
[00:08:19] Tim Hammond: It definitely knocks your business into shape from a due diligence point of view and a documentation point of view and there's things that we did that we wouldn't have done had we not done the crowdfunding, you know, you get all your documents together, make sure that you are investor ready and that's really important because whether that investor is a crowdfunder or a VC that comes along, you've got everything together.
[00:08:39] Tracy Smart: Yeah, there is an element of having to get your ducks in a line, isn't there, before you start?
[00:08:43] Geoff Turral: It's the start of a day, for a tiny business, you don't realise that once you've gone through the first month or so, you sort of have a data room and you also understand, because they're very clear about what's your exit. They're saying okay, we want to see purpose, we want to see a founder story, we want to see a mission, but it's a proposition where we have a bunch of SEIS or EIS primarily, but not entirely, primarily they're in that space, investors that want to see a return. So want you to be really clear about how you exit, which means that you have to think less about what an exit looks like, but what exit readiness feels like and just as you were saying, getting into the process starts you on that journey. There's a lot that isn't about the funds that become super, super helpful, but it's, for me, it felt like 60 percent more work over and above the day job.
[00:09:23] Tracy Smart: What was the biggest shock to you when you started it the first time you did it? Obviously it's a new experience that, that first time. What was the biggest shock?
[00:09:32] Geoff Turral: I think it's the uncertainty, because you do, as Geoff said, you do the due diligence, you do all the documentation, you do a number of other things, you've got to do the graphics, the video, the design, you're putting a big project together and they do say, if you've got two co founders, you should have one of them focusing on the crowdfund and the other one focusing on the business, because you don't want your business falling away during the time that you're doing the crowdfunding.
[00:09:56] So I think probably one of the difficult things is the uncertainty as to whether you're going to reach that target and what you'll learn if you're crowdfunding is that you have to bring a lot of the investors. The crowd there are there to top up what you bring and what I mean by that is you're warming up people,you're warming up your community, maybe there's some angel investors, some SEIS or EIS or VCT funds that want to come in and how you attract those people first to be either your lead investor or the community and I've done both. So the first crowdfund I did, we had a lead investor who put £50, 000 in. So what you're then doing is it's where you set your target and they talk about empty restaurant syndrome. So if you walk past a restaurant and there's no one in the window, you don't go into that restaurant. You want to go into the fuller restaurant and I think you find yourself doing that. So an investor coming into a restaurant, into an investment round, a crowdfund round, which has no other investors in, they're not going to invest at that point.
[00:10:57] Tracy Smart: It's like getting it started?
[00:10:59] Tim Hammond: Getting it started, but also keeping that momentum going. So momentum is really important, updates every day, giving insights into the business, having interviews or having videos that you can send to investors as well about where you are, your progress. So yeah, it's very daunting as a process.
[00:11:16] Sam Jones: Did you have a mix and match approach, Geoff, with a little cocktail of funding to invest in the business?
[00:11:22] Geoff Turral: Well, we have done, so we've raised a total of 2. 2 million across the period that we've been live and of that 1. 2 has come from two crowdfunds and the remainder has come from angel investors, some of whom have appeared because of the crowdfund and gone again outside of the crowd, but it's all equity. So crowdfunding is equity in the sense of what you end up on your cap table with is a line in our case that says Seedrs nominee XX percent. So under that there are around 800 investors from quite big, not six figure, but five figure tickets, all the way down to, I think the minimum investment was 11 quid. So, and they're all handled on the cap table as that one nominee, but it's all equity, it's just massively different scales equity with the cocktail mix is that people got very different motivations. I've talked to some friends who said, you know what, honestly, at the level I've done it, 20 quid, it's just like going to the races and you put some money on rather than you haven't, you feel you've got skin in the game and you're hoping your horse wins out.
[00:12:21] Tim Hammond: There's a few secrets here though, that they don't tell you until you actually get the process going.
[00:12:26] One is on the platform we were on is that you get to the top of the leaderboard every time you get another investor, not how much they put in, but just that you have another investor.
[00:12:37] Tracy Smart: Is the leaderboard like a dashboard that investors look at to...?
[00:12:40] Tim Hammond: If you look at some of the crowdfund websites, you'll see at the top, there's a billboard, there's sort of a poster child that has been paid for. So you know that only if you ask the questions, why is that on there all the time? It's because they paid for it and they're at the top of that. But then the organic list that's changing every minute is based on the next investment they have. So if something has lots of retail investors, as in private investors, who are putting £20 in or £30 in, that will keep showing at the top of that list.
[00:13:12] So you really want to motivate all the people you know, friends, family, customer base, if you've got them, to get in there and put anything from £10 or £20 in, because that's going to keep you exposed at the top of the list and that's something we didn't know until we got started and then some of the bigger companies actually employ agencies to market and if you have a shop, you have a retail outlet, you can give away rewards to entice people to come in and invest £20, and get a cup of coffee or get a t shirt or whatever. The more of those you've got, the further you are up the leaderboard, the more successful it looks like you are in your raising and therefore the more eyes on from the other investors who are already on the platform, who as Geoff said, have some automated investment things set up, and it will come in. So it is about momentum, but there's a number of different secrets, which I can share as we go through this conversation, that having done it a couple of times, if you sort of follow these, things we found, I think it will actually encourage more investors to come in.
[00:14:16] Tracy Smart: So there's not like a minimum amount that you'd accept on, or do you have, can you set a minimum amount of investment and you go live with your...
[00:14:23] Tim Hammond: Yeah just on that, I think Geoff mentioned, where do you set your target? So, initially, you have to work out how much you think you can raise. Now, that's finger in the air. How much you need to raise is one thing and when you start the process as a pure startup, you apply for advanced assurance from HMRC for EIS or SEIS.
[00:14:43] Tracy Smart: And that makes it more tax efficient for the investor.
[00:14:45] Tim Hammond: And makes it much more tax efficient. Now that can take 60 days to do, so you need to get your ducks in a row and line that up because if you come onto the platform and you want to have EIS or SEIS advanced assurance as something to attract UK investors, then you need to have that on there straight away, or at least say it's coming very, very soon and so by having your ducks in a row, having the EIS bid on there, then you become much more attractive to the other investors who are on there.
[00:15:15] Sam Jones: What's the biggest internal challenge? So I guess now with cost of living andinflation up, people having less money to invest is sort of an external problem for doing this sort of funding, but what's the biggest challenge internally in your business when you're going through the process?
[00:15:28] Geoff Turral: For us, I think there were really two big challenges. One is the pure time that it hoovers up and the point that you were making about the fact that the risk is that depending on who's doing what the business starts to fall away.
[00:15:38] Sam Jones: You forget that, you know, people are investing in a business that should be successful and it's fallen off.
[00:15:42] Geoff Turral: And then the second thing is that I think, as you're saying, you have to go through the process almost to understand that actually there's a load of threads that you can pull together because you're hammering away at getting people on board and what I learned was don't pitch anyone, have a conversation with somebody about your business, ask them to feedback about how you're trying to present that business and then just at the end of the conversation, say, so is there anyone in your network that would be interested? And people are generally, you know, being Brits, we're not great at asking people for money in the first place, and people aren't good at being, you know, feeling like they're in a corner, so that's a very open conversation, and often people say, well, actually, yes, there is somebody, so let's have that conversation. You keep, if you like, working up your play, and at the same time, you've got people are saying, well, actually, yeah now you've sort of said it's for somebody else, I want it to be for me, So to answer your question, the key thing for us, the real difficulty, was that we weren't making enough of stitching all of these elements together, that there were improvements to the business, there was enthusiasm from outside, there was a handful of investors who had actually something to say about who they could connect us to in terms of B2B relationship. So it's like the classic thing, you're so in the trench, busy, busy, waking up each morning with a million and one tasks to do. You know, all that content you've got to keep going that you miss the helicopter piece about, well, actually, there's a whole load going on here that tells us really what the shape of our business needs to be in the future.
[00:16:57] Tim Hammond: And I think the one word I would say is excitement, because you need to have excitement yourself, which keeps you getting up in the morning and doing it. But also you need to portray that excitement to the investors and that's on your social media channels. That's on all your updates and if you can keep it exciting, you know, ultimately people get excited about a product or a service that they, I met with a number of investors who had invested into our business, who were customers of ours or became customers of ours because they saw it on the crowdfund and they got excited about the product and I think if you look at something, a series like Dragon's Den, most of those investors will get excited about a product that they can touch and feel, or a service that they know would solve a problem for them and I think it's getting that problem solution out there in the open, saying why your solution is so exciting and I think that excitement can ride all the way through your crowdfunding. But it does require a lot of energy and repeat every day through a two or three month process.
[00:17:57] Geoff Turral: And I think that the challenge you touched on it in terms of you can't do a daily update if you haven't planned a month of updates. The idea you're going to wake up, you'll end up saying the same thing as you did yesterday. So you have to go and plan all of that and just to give you an idea of the structure of campaign, so we want CDAs, and that was broadly speaking of a pre campaign phase where you're going through all the DD and you're building out the assets and they're going to go live on a platform. In the case of CDAs and this may have changed now, they've been taken over by a business called Republic, which is an American business. So it may have changed the profile. But when we did it, you then are in something called Private Live for about nine to 10 days. Private Live is where all the people who've made commitments and gone on and registered and done the little quiz and everything will actually then commit and that's quite a surprise that you would look at it and think, okay, there's all these people who said...
[00:18:41] Tim Hammond: Not necessarily all of them...
[00:18:42] Geoff Turral: No, that's the problem!
[00:18:42] Tim Hammond: ...because I mean, you know, we were, we were on Crowdcube and probably very similar to Seedrs is the early intention or the early access, I think they call it, are people who will just put a figure in it and what annoyed us the most was if someone was interested, at least give us a figure you would be interested in. Don't just set an arbitrary number, which then inflates your early access figure, which you're never going to get. So actually with Crowdcube, there was a calculation as to how much early access is pledged, and what you would expect as a percentage of that, that you should be able to secure and it's probably around 60 70 percent maximum, so don't get excited.
[00:19:19] Tracy Smart: I think that'll be a shock to people, because I remember we had a separate conversation about that and you think you're going to be receiving half a million or whatever it is and actually it's only going to be 60 percent in terms of just set your expectation. People don't always follow through with initial...
[00:19:36] Tim Hammond: But there are three stages, on Seedrs point, but on Crowdcube, let me explain. Early access, then there's Private Live and then there's Live and then actually there's a fourth one, which is Overfunding. So you want to get to Overfunding, because that's where your initial target, which you may set lower than you need, well, let's say you want to raise £100, 000 and you may say okay, 80, 000 is our target because we know if we hit 80, 000, we should be able to get up to 100, 000. So there is a process there.
[00:20:05] Geoff Turral: And you have to think about it a bit like if you were selling your house at auction, it could go brilliantly, but if it's a pound below and it doesn't sell, then it doesn't have a price and in a company terms, you don't, you haven't met your equity position. If you go to a hundred percent and you said, okay, we are at a hundred percent, the company's worth a thousand pounds, then you are worth a thousand pounds. Now it's a retail investment. So VC, a P would look differently at it, but that's your valuation. Of course, if you miss it by a pound, then it's nothing. So that decision and tactically understanding what your target is, is really critical. Again, this may have changed, but at the time that we last did the round Seedrs we're telling us that 91 percent of businesses that go on Seedrs fund and of those, the average overfunding is 130%. But the sort of health warning is that no one will tell you those that look like they think they're going live and they're told at the last minute, we don't think this is strong enough, we're not doing it and quite rightly, they're going to be quite, if you think about their businesses, they've got to have a success rate that attracts it. If they think something isn't strong enough, then they'll be quite clear, they won't just push it through.
[00:21:08] Tracy Smart: That's quite good though, I think, isn't it?
[00:21:10] Geoff Turral: I think, yeah, it's, it's painful if you're that business, but it's quite right because they're looking after the interests of their investors and that's their market, they've got to look after their interests...
[00:21:16] Tim Hammond: And they do prefer if you have a lead investor. I mean, they will say, do you have a lead investor? What proportion of your initial target will that lead investor bring in? And for the two rounds we did, two different companies, the first company, which was Thursday, a dating app, we brought in a lead investor and for the second company, which is Pro Espresso, we did that raise this year with Crowdcube, we did it as a community raise, so we didn't actually have a lead angel, we did have the manufacturer of the coffee machines, put in some money, so that helped, but that was termed a community raise. So perhaps a little less, the momentum wasn't there from the start in the same way as having a lead investor. So the advice I'd bring, if you can get a lead investor, then they're going to look at it more favorably in terms of putting it on the platform.
[00:22:05] Sam Jones: Now, earlier on Tim, you teased us with a few secrets that you were going to reveal and I think our listeners would love to game the system if they can and get an advantage. So what can you reveal?
[00:22:15] Tim Hammond: What seemed like an afterthought to us was actually probably one of the most important things to have, which is if you have a product, then give away rewards because a lot of the retail investors and I mentioned earlier, where someone may put ten or twenty pounds in, that's still going to help you as much as a thousand pounds. That ten or twenty pounds, you can give them a bit of your product. Now, they won't give you twenty pounds worth of product, they won't allow you to give away the same value of the investment, but you have to have a roster of rewards and I think the secret I would give, or an advice that I didn't really know before setting off, was actually really nail your rewards, because that's going to attract the crowd that you don't know and that will really help, as Geoff said, keep that momentum going because obviously you can speak to your own customers, your own investors and they're investing because they know you or they know the product, whereas people on the platform don't know you, they're getting to know you and they can be influenced, should we say, by having rewards, whether that's part of your product, whether it's something special that they don't have, that the customers, or you can't buy and I think that would be probably something that's unwritten and not necessarily in the forefront of your mind when you're starting a campaign, that it's about trying to entice people in with, part of that product as a reward.
[00:23:37] Tracy Smart: You're not a product-based business in the same way are you?
[00:23:39] Geoff Turral: Well, no, because we're a digital platform, suppose it would be probably more likened to your business, the dating business, there's a limit to what you can do.
[00:23:45] Tim Hammond: Yeah, absolutely.
[00:23:46] Geoff Turral: rewards, Isn't there?
[00:23:47] Tim Hammond: Can't give away free dates, can you really?
[00:23:49] Geoff Turral: Yeah, no, we couldn't, so I mean, there's a strong element of getting people excited about what you're doing, it's really interesting. There's a tendency, a risk actually, as a founder that you're overthinking the money side, which is obvious because it doesn't work without the capital. But actually, everybody's about purpose, everybody's about, well what is this doing? Is this something I could see I could use in my life? Does it help my mum, my aunt, my sister, you know, does it help? If I can see it helping then I'll get involved and I think relative to the investment market at all, if you had to try and segment it, I would imagine I have no evidence this beyond looking at the campaigns that succeed, it would seem to be that crowdfunding people, by definition, they are higher in household income terms or, and by definition of investing, so they've got ability to do that. But I think they would seem to be much, much more purpose based than the market as a whole and rightly so, they're not doing it as a business, they're doing it as a retail investor.
[00:24:40] That becomes really important in the way in which people are genuine and not trying to sort of greenwash their business in any way, but that's really important in terms of those sorts of businesses that have that purpose that when founders who are listening to this are talking to people and people are really connected about, Oh, that sounds really good, that's great, that's great you're doing that. If anyone ever says that to you, that's probably a business you might be able to crowdfund, there's a million and one other factors you need to meet, but the first one is that purpose.
[00:25:03] Tim Hammond: I think when choosing a platform, there's also an element of seeing what businesses have been funded already on that platform, because those businesses would have brought in investors that may be new to that platform, who have invested in BrewDog, or Grind, or Revolut, or whatever and picked an area, whether it's a fintech, or a product or service, that they like investing in and they may then choose to invest in SunGod, which do the sunglasses, maybe they'll invest in another clothing brand that someone brings to the platform. So I think choose your platform first, based on obviously the reviews and whether you know it and if you know investors who are on that platform already, but also help choose the platform based on what other products are similar or a similar area to yours.
[00:25:52] Tracy Smart: I was going to ask because you both chose different. Platforms. Why did you choose Crowdkeep?
[00:25:57] Tim Hammond: We met with them last year and they have a lot of history in investing or having investments in our industry. They're also very keen cyclists and cyclists love coffee and they love the brand that we put on subscription. So I think that helped get us into that, because we knew we were joining a community that already existed and that community had invested in other companies that were similar.
[00:26:20] Tracy Smart: And Geoff, why did you choose, what was Seedrs?
[00:26:23] Geoff Turral: Well, it wasn't exactly a toss of a coin, but it sort of could have been. Crowdcube was bigger in the sense, bigger meaning how many people are on the platform as investors at the time and we didn't really know, but what we did do and I say this is that we signed up with an agency that charged us a relatively small amount of money to coach us through the process and that for me was really key. I would have no chance would have been able to do it without their help. and there's five or six out there and I spoke to them all, had interviews with them, and chose a business that was absolutely brilliant in terms of keeping us on track, and they are really clear that they can't recommend, but they, when they highlighted the fact is in this case, they said and I think you might feel differently about it, but in terms of the legal side of things, the Seedrs founders had come from a lawyer background and we thought that was quite useful for us, given the complexity of the way that CarCloud connects B2B businesses with revenue streams, and there's a lot of complexity to the way those rules work, so we chose for that reason, but we could have easily gone the other way. I don't think it's important and I think it was really good to make a decision, like, they're based emotionally and they seem like our type of people, but I think both work, obviously. They compete with each other, but both work.
[00:27:32] Tim Hammond: We started the process with Seedlegals, actually, who are legal documentation and the fundraising platform. They don't raise funds themselves, but they prepare the cap table and all the documents and they do the EIS pre advanced assurance documentation, which they did for us in 15 days. So that actually gave us a really good head start into getting onto the Crowdcube platform without having to do that documentation with them. They do provide that, I know that, but perhaps it would have taken longer.
[00:28:01] Geoff Turral: I think what I did, which I found really, really useful, is I put a budget of £100 into Crowdcube and a budget of £100 into Seedrs and it wasn't to make a choice about the platforms, it was just to follow some campaigns and it's amazing that when you go and do it and you see how a campaign presents to you.
[00:28:19] I was trying to sort of put 20 into five campaigns in each. That was the most useful part of the research, because you see not so much about the platforms, but you just see the way that people present, what chimes, what it feels like. Also, the fact that picking up what you were saying about the way in which people pick their sectors, you see all of the stuff on the investor side that says, right, when you're looking at stuff, do you want to be notified about EIS, SEIS, this, this, that, the other was some sort of selections that investors could make where clearly certain things are being cut out straight away and just understanding what that looked like. So, ah, okay, that's how people make decisions, let's make sure we're completely clear about what we do, because there's absolutely no point in missing that sweet spot again. It's no different to a huge VC versus a retail investor. You want to be talking to somebody who's interested in what you do, but at least understand how do people make those selections?
[00:29:06] Tim Hammond: And I think the other tip I would give is put on a stunt if you can. So it used to be in crowdfunding that you'd be able to present and I think this was pre COVID, you would present to an audience of investors who would turn up and you could do a stunt on stage. So what I mean by that is you're actually showing the product off, maybe you trip over the steps as you go onto the stage, that sort of thing. You want to get their, their eyes on. Now how do you get the eyes on you rather than the other 25 or so campaigns that have gone live in the same week? We went live early September, the busiest time on the platform because we were told it was the busiest time on the platform for investors.
[00:29:46] As well as being the busiest time on the platform for investors, it was the busiest time for campaigns. So the danger was we could have gotten lost amongst everything that was out there. So you have to make a difference, you have to stand out and I agree with Geoff, you should research, follow other campaigns, learn what they're doing, know that the updates you give can't just be sort of like, Oh, it's Thursday today, we've got another sale. You know, it's got to be interesting stuff, but the stunt I think is really important. So what we did is we actually offered to make everyone in the Crowdcube office, coffee and our product being a coffee machine, myself and my co founder drove down to their offices, brought the machine in, had an audience of all the Crowdcube staff and made them a cup of coffee. That got social media coverage, videos. We could use that content and got us back to the eyes on from investors. That was about three days before we closed, so it was about having a stunt that could really sort of focus people's minds on actually, yeah, that company is doing something, they're in the Crowdcube office. How do you stand out from the others? And so having some sort of stunt, whether that's what we did or, you know, other social media that can get a lot of coverage, I think it's really important.
[00:31:00] Sam Jones: How did you find that Geoff? Because Thursday, they're dating, coffee, they're quite sexy products, nice businesses, quite emotive. Yours' solves is a very big problem, you know, you're saving people time and frustration and annoyance. Did you go down that path?
[00:31:12] Geoff Turral: Well, my main learning this morning has been, I wish I'd done this before the rounds, because it would have been, what I'm learning is it would have been so much better! So I think ours was, in comparison, pretty, quite dry in that we were really focused on the choir. So I was always looking at thinking, OK, it's like a sort of choir, it's like looking at an archery board, and there's some people you really know in the middle, and then there's this outer ring of people that you're getting to from asking, is there anybody else in the world and and there's that third ring of people you don't know yet, that are just on Seedrs. But what was really important, and it's particularly true of LinkedIn, probably of all of the social channels, because it's so very much corporate and work, was that there's this choir that is watching you and just wanting to back success. Now, they might not invest, but it doesn't mean that they don't open their doors then to a conversation as business people and we find that time and time again, that people say, Oh, yeah, yeah, that was great. We saw you smash your target. So we were very focused on that but yeah, I'm regretting the fact it was such a dry campaign. I'm just going to fall down the stairs at whatever, whatever crowdfund I do next, yeah!
[00:32:10] Tracy Smart: I do.
[00:32:10] yeah Well, just to wrap it up a little bit, would you do it again and you've both been through it at least about twice each, I think.
[00:32:18] Tim Hammond: I think I would now, I mean, if you can sort of have a steady path, you need to have an exciting product or service and it's got to be a business, I think, more so now than ever. It's got to have a business that is going to show and demonstrate how you can make money out of this. You know, the days of making an app on its own that could, oh, we're going to get five million downloads. It's not enough to say it, you've got to prove it and I think I would only do a crowdfund again if we were at a stage with the business where we were already revenue generating and you have a differentiator over the market.
[00:32:54] Tracy Smart: What about you, Geoff? Would you do it again?
[00:32:55] Geoff Turral: Well if we were at the stage we were, absolutely. We're now getting that stage where we are opening the doors on, if you like, more formal investment channels, still equity, but in terms of, if you like, the professional investment channels. But if we were at the same stage again, absolutely, because over and above the capital, it's what comes behind it. It's a force of advocates that are, to this day, really punching hard for CarCloud, talking to friends about it, talking to, you know, as we bring out business products, they're talking to about work and so it's really just unusual that you can get that group of people who, as you said at the very beginning, they're not sort of all over you in terms of trying to get a place on the board, but provided you do a quarterly update, keep people informed, people will come back with ideas, thoughts, they'll let you know, in our case, if the product isn't working as it should be. That side of things, super, super valuable. So to answer your question, Tracy, yes, we would do it again, whether it's right for us going forward,
[00:33:47] Tracy Smart: At your stage? Yeah.
[00:33:48] Geoff Turral: No, but I would never rule it out because even if it's part of a wider raise, it allows you to do what it says on the tin, which is add to the crowd and every business needs to be constantly, constantly adding to the crowd.
[00:34:00] Tracy Smart: Fantastic.
[00:34:01] Sam Jones: Excellent. Thank you very much. That was fascinating. I think my takeaways are that you need to bring lots of energy and not too much cause you need to keep some on your own business and build some brand ambassadors, people who really believe in your product and will invest in it and be part of it, feel like they're part of that journey.
[00:34:14] Tracy Smart: I really appreciate it guys. Thanks very much for your time!
[00:34:17] Sam Jones: Thank you!
[00:34:17] Tim Hammond: Thank you!
[00:34:17] Geoff Turral: You're welcome, it's been good. Thank you.
[00:34:18] Sam Jones: Thank you for tuning into this episode of Finance Focus. We hope you enjoyed it, found our discussion insightful, engaging, and entertaining.
[00:34:25] Tracy Smart: If you have any questions or feedback, please feel free to drop us an email or you can find us on LinkedIn. Links are in the show notes. We always love hearing from our listeners and look forward to your thoughts, ideas and suggestions. So until next time, stay financially savvy.