#Crowdfunding – a user’s guide.

Late last week, our start-up raterAgent got the agreement from Crowdcube to go live on the latter’s site. raterAgent’s ‘pitch’ for investment, from Crowdcube’s 150,000+ investors, would be online before Weds 25th March.

2 days in and we’ve raised over 35% of our target. 37 investors have dedicated more than £26k to our cause. Before this process started, I would not have dreamt of being this far on this quickly but we’re incredibly grateful to all those already invested – and to those shortly to join raterAgent’s Shareholder Team too.

So what’s crowdfunding like? Is it really that easy to raise significant investment from a collection of people you’ve never met before?

Taking the latter question first – it’s really hard to convince people from behind a keyboard that you’re worth an investment. Crowdcube have been brilliant regarding the set-up but also ruthless and challenging when it comes to due diligence (and rightly so). They do not want any-old, ill-thought out start-up tapping their hard-won investor base up for thousands then walking off with the proceeds.

No, they want businesses that have solid, profitable plans right from the start, that are clear in their strategy and have sensible funding requirements which stack up against the company’s business plan and goals. There are only 29 businesses currently funding on Crowdcube in the whole of the UK. That’s daunting and humbling at the same time.

Having been sure in our strategy from the start that we would build a ‘Minimum Viable Product’ (MVP), iterate (and iterate and iterate) from there until we were confident that the site achieved its main aim of encouraging maximum review throughput – and only then go crowdfunding at our ‘Seed’ round – we were delighted to get such quick approval.

The weeks leading up to the pitch to Crowdcube, however, included an astonishing amount of hard work – the video was a logistical challenge in getting across to a number of clients and commentators in a single day, the projected Profit & Loss and Balance Sheets needed precision and depth, the site needed to be as complete as possible for launch and – more than anything else – it all needed to work together. raterAgent’s over-riding brand promises of ‘trust, transparency and simplicity’ needed to ooze from every single piece of information that was put out there. And we’ve done that.

What’s crowdfunding like? It’s nerve-racking, uplifting, terrifying, validating, humbling, tense, addictive and inspiring. It’s not one pitch and win/lose. It’s a continual, incremental, conversational pitch with multiple investors with multiple drivers, all of whom you will want to engage with and understand.

If you’re thinking of going for crowdfunding, do three things – make sure your product works; make sure your numbers stack up; and make sure that you’ve had as much sleep as you can. Crowdfunding is a very public event in many ways – but often, late at night, you just have to press that ‘refresh’ button one more time, to see if anyone else has put another few hundred £’s in …

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