Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Introduction to crowdfunding for startups and sm es 9.11.17


Published on

Clive Reffell Crowdfunding Presentation 9-11-17

Published in: Business
  • Be the first to comment

  • Be the first to like this

Introduction to crowdfunding for startups and sm es 9.11.17

  1. 1. Introduction to Crowdfunding for Startups and SMEs 9 November 2017
  2. 2. What is crowdfunding? • A new online and alternative way of raising money to launch or expand a business • Through selling products, selling equity, or taking a loan • Get a little from a lot of people rather than everything from one source • Largely based on effective social media and digital marketing to spread the news • £47m invested in 82 equity crowdfunding projects Q1 2017
  3. 3. The Cheeky Panda: a £5m business in under two years Copy this link:
  4. 4. Crowdfunding provided a full template to build the business
  5. 5. Julie Chen and Chris Forbes
  6. 6. More than just money • Target of £10,000 orders through donations-for-rewards crowdfunding • Start date, end date and all-or-nothing funding process focused efforts • Proved public demand existed • Recovered some of their initial £5k outlay • Provided samples for meeting with stockists • Effective PR generated media coverage – Good crowdfunding = good marketing • Crowdfunder link to Amazon Launchpad for innovative start-ups
  7. 7. Some donations platforms
  8. 8. Niki P Designs 103 backers pledged £17,773 against a £17,500 target
  9. 9. Landmark Locations
  10. 10. Angel investors
  11. 11. An angel investor liked The Cheeky Panda • Initial investment in the business meant the founders could ditch their day jobs • Grew distribution through online and offline stockists • Tackled the corporate supply chain to sell to hotels and airports • Maintained media coverage
  12. 12. Equity crowdfunding • Target of £350,000 • Crowdfunding platforms make it easy to invest • Raised £500,000 for 10% equity • They had a business valued at £5m!
  13. 13. Equity platforms in a crowded market Market leader, claims 48% market share No. 2, recently raised £10m From early funding to public listing Minimum investment is £25,000 Industrial and B2B businesses. Minimum £1,000 investment. VC interest. Angels, equity and debt all under one roof
  14. 14. Generous investor benefits • Exist to encourage investments in private companies • Companies using crowdfunding register under EIS, Enterprise Investment Scheme – Minimum 3 year lock-in for investors – 30% tax relief on up to £1m invested p.a. – That can be carried back to the previous tax year – Capital gains are tax free – Further tax benefits if the investment tanks – Exempt from inheritance tax after 2 years • £16bn invested in 24 years
  15. 15. Seed Enterprise Investment Scheme • Each company can raise £150,000 • 50% tax relief* for investors – who can be directors - up to £100,000 per person • Can be carried back to the previous tax year • Zero CGT after 3 years • Maximum loss of 27.5% of sum invested if the business fails * assumes 45% rate tax payer
  16. 16. James and Emma Yeomans
  17. 17. • 2013: sold 34% equity for £58,000 to establish a craft brewery based in the Royal Arsenal 3 year sales growth to 4 x original capacity January 2017: traded 12% equity for £750,000, a company valuation of £6.25m – Original investors sit on a 3,600% paper profit • Target is 8 x growth in the next 3 years
  18. 18. More than just money • Crowdfunding provides a template to launch and build a business – Business plan and cash flow projections – Research the marketplace – Marketing – Selling, to early backers and customers – Deadlines – De-risk initial production • Isn’t it what all startups and SMEs should be doing anyway?
  19. 19. It isn’t easy • Chris and Julie, The Cheeky Panda – 4 months of 20 hours per week – £5k budget – Downloaded Harvard Business Plan – 8 weeks thinking about the video • James and Emma, Hop Stuff Brewery – Working to 3am on financial projections
  20. 20. Debt crowdfunding for existing businesses • Investors seeking better returns than from traditional options, though risk averse • SMEs get faster decisions and better terms than from traditional options, retain equity • Borrowers usually need minimum two years’ trading history and/or assets as security • P2P lending platforms include
  21. 21. Clive Reffell 07788 784373 @Cliveref