Executing a fast & successful crowdfunding campaign: guest post by TableCrowd speaker Joe Carnell, co-founder of Growth Hat
Back in October we had the great opportunity to host a dinner with Growth Hat, a specialist pre-seed & seed crowdfunding agency. Joe Carnell was our speaker and he shared all on executing a fast & successful crowdfunding campaign. We invited Joe to share some of his insights for you in this post.
Joe Carnell is a multiple award-winning, pro startup, brand focused, tech-loving entrepreneur and co-founder of Growth Hat. He broke down the process into 7 manageable points which, if followed, should contribute towards a successful and impactful crowdfunding round.
A post by Joe Carnell
I’ve lost count on the number of conversations I have had where ambition blinds realism. You could argue that ambition is key to growth, but swayed disproportionately in either direction, it becomes detrimental to such.
A realistic approach to valuation, funding requirements and growth plans is a great place to start. Overachieving is much more impressive than falling short and whilst investors may want to see ‘unicorn’ returns, any investor worth entertaining will see right through the finger in the air figures and destroy any belief or trust they have in you.
I was once approached by a company looking to raise £750 for 10% of their business. On the first review, it became clear that the company required closer to £250k of funding to launch to market and the additional £500k was vanity capital which was adding unnecessary dilution to the cap table. Finding a sweet spot between ambition and realism is key to a crowdfund raise.
Creating a proposition which is enticing enough to create hype and ‘FOMO’ through well thought out valuations and growth strategy, rather than alienating with unachievable and ignorant numbers. Benchmarking against other campaigns in your sector is great as a soft tool, however, valuations and funding requirements underpinned by hard quantifiable numbers give the objectivity and balance which will work in your favour.
2. David and Goliath
Its commonly known that David killed Goliath, the classic story of the underdog. What isn’t common knowledge is the fact that it wasn’t just the stone which killed Goliath it was the trajectory at which it was flung at. By taking the step into entrepreneurship you have made the decision to become David, the underdog, looking to take down metaphorical Goliaths with innovation and disruptive problem-solving.
So why not allow yourself the same giant-killing trajectory? In crowdfunding terms, this trajectory comes in the term of ‘cornerstone’ aka offline investment, aka funds which weren’t raised through the crowd platform. In other words, your family/friends/ close connections/traditional investment. (We suggest this figure is 60% of the funds you will look to raise in the total round) Staggering this investment is also a common tool used to maintain engagement and momentum during a campaign.
Imagine for one minute that these funds are the stone, then the sling is the timing of funds. A campaign we recently closed saved a key high network investor with successful experience in the sector until the final two weeks of the campaign. This investor was profiled through a case study and announcement, giving the campaign the boost it needed to overfund to 150% of funding target.
A balance of traditional capital and social funds is key to a balanced cap table, respectively bringing structure and proof of concept, a giant-killing recipe in my book.
The best advice I ever received was to become more unapologetic. Not to be confused with arrogance nor ignorance rather collected and pragmatic confidence in ability and objective. As long as you are aware of yourselves as a business and your potential stakeholders you shouldn’t feel the need to apologise for ambition and actions when creating an identity for the business funding round.
Take Brewdog for example, Crowdcube’s golden child, their campaign ‘equity for punks’ tapped into the anarchical punk movement of loud, unapologetic and aggressive music and everything it stood for, a theme which resonated with the core beliefs of crowdfunding, autonomy.
This campaign also resonated with thousands of people across the country who together rebelled against the big beer companies (Goliath) and in return provided millions of pounds of social capital to fund their movement, a movement now described as a “post-punk apocalyptic motherf**ker of a craft brewery”. You don’t need to tap into the punk movement to create a strong identity, however, you must stand for something and be true to such.
A campaign we ran was geared towards the “inclusive, accessible and borderless” nature of blockchain applications. The whole campaign was focused around people all over the world and how one simple bit of technology can connect and enable global economies.
The campaign was unapologetic in pragmatic ambition, supported with real-world problems and our solutions. This emotional narrative created a bold and successful campaign tapping into the hearts of investors without the need for apologising.
4. Newtons 3rd Law
As it goes, every action has an equal and opposite reaction. Crowdfunding is an 8-12 week process with key milestones, objectives, funding levels and strategy with clear actions agreed beforehand. Also, the key to the process is the ability to pivot and change the action in order to change the reaction.
Take a mail campaign we ran; the mail-shots were sent out using professionally designed templates, the copy was written, checked, then checked again and the timing was planned down to micro granularity, however, a 2% open rate was overshadowing the pragmatism of the strategy. After a series of A/B testing and strategy meetings, a pivot was agreed in order to revolve such low engagement levels.
What ended up was a direct email from the founder’s personal address with enough ‘!’ to give an English teacher a heart attack. This pivot drove a 70% open rate, 50% click-through rate and over £100k of investment.
So remember if the outcome isn’t working, change the input action, as crazy as it sounds the ability to pivot towards an agile target can be the difference between success and failure.
5. Battle stations
Anything involving money and humans involves a level of uncertainty and a need for control and structure. Campaigns are no different. They are demanding, usurping and challenging tasks which require full mental and physical commitment from those undertaking.
At Growth Hat we manage the day to day operations of the live campaign, but there is an indisputable need for a founder to match activity with proactive behaviours such as attending funding events, meeting potential investors, picking up the phone to friends/family and close networks explaining the investment opportunity. Horse’s mouth carries weight and weight is what a campaign needs.
6. Tekashi’s Castle
There are certain similarities to be drawn between the well-known game show Tekashi’s castle and crowdfunding. As with the game show contestants battle through increasingly challenging and obscure levels, avoiding obstacles aimed at knocking them off their path before reaching the final stage to defeat ‘the general’, a challenging task requiring teamwork, strategy, and good wind.
As with the game show, crowdfunding is full of obstacles aimed at knocking you off your stride. Competitors looking to derail you, potential investors looking to scrutinise before investing or passer by’s looking to flex their brain muscles. This typically takes place in the ‘forum’. A battlefield of communication between yourselves and potential investors. A battlefield which can decide the war.
We were once asked to assist with a campaign which had taken a turn for the worst when the founder decided the respond to the forum question of “How did you come to this valuation” with “Who are you to ask me such questions”, turning a reasonable ask into a word war with only one clear winner (to clarify it wasn’t the company). This forum thread riled up the rest of the campaign followers who decided to test the founder with a series of similar questions, which got a similar response. The campaign went sour very quickly and the company ended up “leaving with nothing”.
This, however, can be easily mitigated with a clear and consistent identity and tone, something we work extremely hard to formulate pre-campaign and one which if followed should allow you the tools and knowledge to defeat ‘the General’.
The last and most important point is to remember to breathe. Sounds crazy right? However, there’s substance behind such.
Campaigns are public and have a ticking clock applied to them counting down from 30 days. This creates a public-facing version of the biggest human fear, time running out. Not being good enough, death, returning from holiday and failing a campaign all fit into the notion of time running out.
Put this onto a public platform with 600,000 eyes on, understandably you may forget to breathe. Knowing this, take a step back, look around you and notice the parties who are there supporting you and want you to succeed.”
Fundraising in 2019? We’ve got you covered: