We meet the Surrey businesses taking the crowdfunding approach
PUBLISHED: 09:40 01 April 2020 | UPDATED: 16:16 01 April 2020
Crowdfunding is becoming an increasingly popular way of raising cash for all kinds of business and community projects. We take a look at some of the ventures in Surrey turning to this approach…
Crowdfunding is the practice of funding projects or ventures by raising small amounts of money from a large number of people. And it's becoming one of the most popular ways to secure fast cash. With finance being critical to the make or break of all kinds of bright ideas, more creative ways of raising the money to fulfill the ambitions of small businesses or community groups are being dreamed up.
A quick glance at Crowdfund Surrey, the local arm of giant platform, Crowdfunder, shows a whole variety of fundraising projects taking place across the county: The replacement of six bells on a local church, for instance, and a mission to fix a local road when no one else will. There's also short films hoping to be supported, niche magazines that want to remain published, political campaigns to be fought, and pubs to be turned into community 'hubs'.
The amount of money being secured for all kinds of needs is immense. On one platform alone, the figure stands at over half a million pounds raised and over 350 projects successfully funded. And that's in Surrey alone.
When Craig Vroom, owner and brewer at Titsey Hill Brewery needed capital to invest in new equipment for his growing microbrewery, he turned to this method. Eighteen months on, he's secured the cash for a new 2,000 litre brewing system and he's on the hunt for bigger premises to cope with demand. "It went really well - better than I expected," admits Craig. "Luckily I had great relationships with local pubs so they were able to help me put together some amazing rewards packages."
While Craig managed to secure the investment he was aiming for, he urges anyone else thinking of going down this route to over-estimate the amount they need to achieve. "Don't expect to put the full amount in your pocket either," advises Craig. "It's harder (and pricier) than you think to put together an appealing proposition, and you need to get the promotion side of things right as well."
The investment in getting his brand out there has definitely paid off for Craig. In fact, he now has a whole tribe of fans providing his own personal PR. "What I realised is that everyone who supported me is out there talking about my beer and spreading the word. So really it's a massively worthwhile marketing exercise too."
Even big banks are taking notice with Natwest recently launching a portal to help more women start small businesses via crowdfunding. Back Her Business sees the bank teaming up with Crowdfunder to provide free coaching and opportunities to meet like-minded women. In addition, they are also offering up to 50 per cent of the fundraising target for certain successful projects.
Amanda Shovelton, business growth enabler at Natwest, Guildford, believes that the way people fund their businesses is changing. "It's not just about traditional methods for funding that people have access to any more," she says. "For instance, banks were once people's first port of call, followed perhaps by venture capital or business angels. Now, if we can't back a business for any reason we're more likely to refer our customers to alternative sources, such as crowdfunding."
West Molesey-based Julianne Ponan, founder of free-from food brand Creative Nature, recently secured more than £500,000 of investment via equity crowdfunding site Seedrs. No stranger to selling the benefits of her growing business, she had previously featured on TV show Dragons' Den, but turned down £75,000 from Deborah Meaden.
This time around she wanted to raise cash on her own terms, and crowdfunding was the answer. "This method appealed to me because you could create a community of people who backed your business and who would endorse and buy into your brand," Julianne explains. She had hit 70 per cent of her target within three days - an achievement she puts down to plenty of planning. She invested heavily in promotional material such as super slick video material and an ambitious social media campaign.
While Julianne urges anyone considering this approach not to underestimate the outlay, she puts her success down to something money can't buy - an authentic and personal pitch. "We communicated constantly with our investors," Julianne says. "We made sure that our proposition was extremely clear and when people had questions we would be there to answer them."
While crowdfunding can certainly have its benefits, the process isn't without its challenges too. Julianne isn't alone in speaking about the laborious process involved from plenty of upfront planning to the due diligence and documentation needed after the campaign has run its course. "It's also quite scary," she confides. "You open yourself and your business up to scrutiny, and if you don't achieve your target, it doesn't look great." No doubt about it, crowdfunding puts the nuts and bolts of your business under the microscope, and failure can feel much harder in full public view.
In fact, this was the experience of Farnham Community Farm, which launched a campaign to boost funds in order to improve the infrastructure at the farm. This community-supported co-operative had already benefited from grants through the National Lottery and The Postcode Local Trust, so why crowdfunding?
Katie Forman, farm coordinator explains: "We liked the idea of taking matters into our own hands and giving people something to talk about. The assumption may be that we're well-funded, but the reality is there's a huge amount of work that goes on behind the scenes here, and we're constantly having to raise money to do it."
In the end, the campaign only reached a third of its target, but Katie views the awareness it raised as a success. "We wanted people to understand our challenges, so it wasn't detrimental, and the money we did raise has been put to good use." The biggest takeaway from her experience is that a successful crowdfunding pitch isn't something you can just pull out of the bag. She adds: "The work involved can feel like a full time job - and forward planning is everything."
Crowdfunding: What you need to know
- Do: Plan ahead - The more you put into your project, the more you're likely to get out. Get a clear and compelling message and marketing plan in place before you launch.
- Do: Reach out - Whether through social media or your own contacts, line up some prospects before you launch your campaign so you know that some of the cash is guaranteed. Also, people are more likely to invest if they see others coming on board.
- Do: Be authentic - The more personal you can make your campaign, the more likely it is to resonate. Tell stories and use experiences to engage your audience.
- Don't: Underestimate what it costs - Watch out for all the costs associated with crowdfunding - marketing, commission (depending on which platform you use) and incentives. The good news? Investors are rewarded with perks, not equity, so you retain full ownership of your business at the end of it.
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