Best and worst of crowdfunding
10th February 2016
Crowdfunding has moved quickly from a trend towards a mainstream model for many innovative and growing UK businesses
What can we learn from the best and worst crowdfunding and P2P investments over the past 12 months?
Donation and equity crowdfunding campaigns:
Greek Bailout – €320bn Euros target crowdfunding campaign - Indiegogo
If ever there was a crowdfunding campaign that could change the economic downfall of a European country this was it. Investors pledged only very small amounts into the Indiegogo platform for the campaign and it sadly failed to reach its target but it had the ability to capture the topical news and engage with the general public as they tried to save Greece by waving their £10 notes. This is a great example of the power of community and support for a campaign as nearly 2 million euros from 108,654 people in 8 days was raised but sadly did not make a dent on the 320 billion euros needed to bail the country out.
Exploding Kittens - $10k Target crowdfunding campaign - Kickstarter
A card game for people who are into explosions and kittens. Perhaps one of the most notorious crowdfunds of the whole of 2015 raising well beyond its $10,000 target being backed by 19,382 backers raising $8.7million. This was truly a community backed campaign, and momentum was driven by innovative ways in engaging with the community and using social media and collaboration with people who had large followings.
Flow Hive – $50k Target crowdfunding campaign - Indiegogo
Flow Hive is a new design beehive box that allows bee keepers to harvest honey from the beehive box without disturbing the bees. Traditionally, honey is harvested by sedating the bees and taking the beehive apart. The April 2015 campaign raised $12.4 million and is a great example of capturing the ideals people believe in and support to help make a difference. Empathy can help a campaign go a long way.
Camden Town Brewery – £1.5m Target crowdfunding campaign – CrowdCube
Having successfully raised beyond their target on crowdfunding platform Crowdcube in April 2015, just over 6 months later, they announced that they were being acquired by the beer giant Anheuser-Busch InBev providing a great equity crowdfunding success story. There are a lot of customers out there who loved their beer and by utilising their customer loyalty they were able to reach out and raise investment from them.
Pavegen - £750k Target crowdfunding campaign – CrowdCube
A target of £750,000 was smashed and reached nearly £2million finally closing on £1,903,400. This is perhaps one of the most innovative crowdfunding projects of 2015. It is a technology driven company which converts the pressure exerted on pavement slabs when walking or moving on them into electricity. It is a seriously clever idea and one which will hopefully have a huge social impact. Because people believed it will make a difference to people and the world it was a no brainer for people to invest in.
Chilango’s - £1m Target crowdfunding campaign - CrowdCube
This chain of Mexican restaurants has filled many professional’s bellies in Central London and always has a queue of hungry customers waiting for their days ‘chilango’s fix’. By marketing their campaign in restaurants, Chillango’s leveraged the power of good food and customer interaction to raise this impressive amount on Crowdcube.
Just Park – £1m Target crowdfunding campaign – CrowdCube
This campaign caused some excitement in the investment sector when it gathered so much momentum with the campaign that it smashed its target of £1million and closed the campaign with a whopping great big £3, 514, 110 with one investment of £500,000. This app allows you to search and pay for parking spaces from the conventional to the less expected places (such as drive ways). By leveraging its database in addition to getting in front of as many potential investors as possible within the time frame, they amassed great support to fund the campaign.
Rezonence - £500k Target crowdfunding campaign – Crowd2Fund
This is a serious company who really mean business. They achieved a raise of £503,000 on the Crowd2Fund platform. Rezonence successfully sold a 13% equity share for £503k. The business engages people with brands with interactive advertising. The 20 investors now have a stake in a digital marketing agency in a rapidly growing sector. The innovative founders were able to drive investment into the campaign alongside Crowd2Fund by attending events and meetings which they leveraged alongside ongoing support from BBC Worldwide Labs.
Top crowdlending loans:
Ruroc – Target £160k crowdlending campaign – Crowd2Fund
A leading extreme snow sports brand that manufactures and supplies all in one patented ski and snowboard helmets this raised a business revenue loan from Crowd2Fund after initially expecting to reach a target of £150,000 but in fact raised £167,000 amongst its loyal crowd. It created quite literally an army of brand ambassadors and led to a surge in increased sales with new and existing customers wanting a piece of the action. Not only did the customers receive a great set of rewards but also a decent 10% APR on their investment
Hummus Bros – Target £125k crowdlending campaign – Crowd2Fund
This much loved innovative chain of restaurants raised a bond of £177,000 helping them expand further to central London locations. Who thought someone could make hummus taste so varied and good? They have even launched a book, full of lots delicious recipes so you can learn how to make and eat their products at home. This is a local eatery for the Crowd2Fund office having hosted the raise on the platform.
Grind – Target £750k crowdlending campaign - CrowdCube
This cool coffee company has used its knowledge of fresh coffee to the max and has plans to open up more stores including a cocktail bar serving up coffee infused drinks and food all to an awesome set of music. They aimed to raise £750,000 on Crowdcube mini bonds at an 8% Apr rate but actually managed to raise £1,294,000!
Worst Crowdfunding Campaigns:
Skarp Laser Razor
This campaign was pulled from Kickstarter following the spotlight on the Zano mini drone. As the laser was not even in prototype stage the crowdfunding platform was unable to list the business fearing a backlash from unhappy investors who most likely would not receive their laser razer.
JVD Bond Case
A failed fund set up to raise enough money to bail a man out of prison that had been charged with first degree murder for killing a 17 year old. GoFundMe pulled the campaign
A Photo of President Barak Obama
This campaign set up on Kickstarter literally was asking for money for a photo of Obama from 3 years ago.
From the crowdfunding successes and pitfalls in 2015, it’s clear that with the right determination and dedication, utilising a crowdfunding platform to drive investment for your campaign could help you not only reach but surpass your projected target raise.
By being creative about how you engage the crowd and by offering the most appealing rewards, the sky is the limit with the amount of people you bring on board to support a crowdfunding campaign.
We are seeing even more campaigns overfunding and we are optimistic about what’s in store for crowdfunding in 2016. However, we have also seen that investors are becoming more astute and thorough with the businesses and the team behind it that they pledge to. More importantly the rewards offered have become an important incentive for investors looking to part with their money.
Crowd2Fund differentiates itself by conducting thorough due diligence on businesses and is a platform for more established brands seeking to leverage their customers and the public for a loan which can be offered at a cheaper rate than more traditional sources of finance.
Past performance and forecasts are not reliable indicators of future results. Your capital invested is not covered for compensation in the event of a loss by the FSCS. Tax treatment will depend on the individual circumstances and may be subject to change. Please see our Risk section before making an investment decision.