Nordic secrets of Successful Equity Crowdfunding Campaigns – a report

Fundedbyme

By: Michal Gromek 
Since launching Equity Crowdfunding at the end of 2012, FundedByMe has been the frontrunner in the Nordics. 449% CAGR and over 100.000.000 SEK money raised “later”, we wanted to identify what makes some companies more successful than others.  Results are based on own nethographic real time data* and give general indicators about which factors make some campaigns more successful than others. Under the lead of our Business Developer, Alina Koutun, we at FundedByMe have created  – “Successful Equity Crowdfunding Campaigns – A Nordic Review*”, where we investigate the main elements of crowdfunding campaign success.Our findings tell us that social media, high quality financial documents and the right background of team members seem to be crucial for achieving a funding goal of a company.It is not surprising that campaigns showing signals of quality tend to be more successful. As an investor it is crucial to know when and how the company or its founders have been successful in the past. As a result, both the entrepreneur and the investors might be more successful in future projects, which helps the funders to make an investment decision.According to our review, the signs that seem to have the biggest impact lies already in the process of preparing the campaign. The most important factors that increase the possibilities of funding are:

  • Uploading a reliable financial forecast and valuation, since this increases the campaign’s chances to receive the desired funding by 37,3%.
  • Reliable market statistics that increase the chances by 27%.
  • Already received external funding (from government institutions like Almi, Vinnova, EU), which increases the likelihood of being successful by 23%.

One of the most astonishing findings was the effect of social media. If including a link to the campaign’s Facebook or LinkedIn page in the campaigns pitch on the crowdfunding platform, the success rate increased by more than 30%. (31,37% for Facebook and 32,58% for LinkedIn).

Furthermore, 10 likes on the company profile of any of those social media portals add additional 6% for the success (6% on LinkedIn and 5,6% on Facebook). Also, in case the project has been submitted from a capital city (Copenhagen, Helsinki, Oslo or Stockholm) the likelihood for it to succeed increases by 21%.

Is this what you had expected? One of the main surprises was that sharing the company’s activity on the campaign page on Twitter did not have an effect on the company’s success.

The team: Surprisingly, the report indicated a small paradox. The amount of employees within a team and the amount of these people having a masters degrees proved not to have any effect on the rate of success. On the contrary, if the entrepreneur has a relevant education or a professional career in consulting, the success rate of the campaign increased by 25%. Moreover, a relevant business education can influence the company’s success rate by 25%.

Lastly, for all of you entrepreneurs uploading a campaign we suggest that you describe your team members’ backgrounds and achievements closely. This is because investors tend to value this factor highly when making investment decisions.

It seems like the funders would like to know, if people that stand behind the company have been successful in whatever field they were operating in the past.

Summarizing: While seeking funding for an equity based campaign, prepare the financial documents such as Market Statistics and Company Valuation well. Tell the crowd about the successes that your company has achieved so far with external funding, your awards and about the outstanding performance of your team members. Upgrade your Linkedin and Facebook corporate profiles often. You might skip Twitter activities on your campaign page:).

You will find the full report by clicking – here

*What methodology did we use in the Report? The campaign outcome was modeled by means of logistic regression as a function of various explanatory continues and category variables. The dependent variable was binary and shows either a successful or unsuccessful outcome.

Download the report here for free

 

3 Key Trends Will Change Crowdfunding in 2015

3 Key Trends Will Change Crowdfunding in 2015

Many people wonder what might happen in the future. We at FundedByMe don’t have a crystal ball, but we can forecast how the year 2015 will be for crowdfunding in Asia. So here it is.

Right now you can see 3 main phenomenons in the APAC region that lets you predict the future of crowdfunding:

  • The social / mobile / chat obsessed citizens
  • Economics of E-commerce and E-finance
  • Innovation in reducing the unbanked rate

You will find some of the numbers below. But what do they actually mean for the industry? Let’s take it step by step. More and more people who spend their lives on mobile chat applications will result in changing global behaviour patterns. Not only we will be able to do anything using our mobile devices, but also will expect shorter offers, long creditable relationships and faster payments that we can handle with any smartphone. And you know very well where there is demand, there is supply.

Strong growth of e-commerce is usually the first step of strong growth in P2P finance. If you want to talk about e-commerce market in Asia, the relevant word would be “explosion”. And so with crowdfunding you should probably use “booming” as well. In China alone the market size is estimated to be $40 billion USD, where just a couple years ago the industry didn’t exist at all. The Asian states are being more aware of the role of the industry and start to implement regulations for it – Malaysia was the first country doing this (and by the way, FundedByMe with its partner are one of the first companies receiving the license for equity based crowdfunding).

Finally, crowdfunding significantly helps to decrease the rate of people who are not banked at all or are underbanked. Why? Because it can be used by people who have no credit history! Just check what happened in Kenya thank to M-PESA, a Mobile Phone Payment System. Right now the number of M-PESA users is higher than bank account holders.

Want to learn more details? Watch the performance by Adrian Koh, FundedByMe General Manager in the APAC region, and check a presentation by him.

Download presentation here.

Crucial factors for success in crowdfunding

Crucial factors for success in crowdfunding

FundedByMe recently investigated and created a research report on the main elements of crowdfunding campaign success. Social media and the right team seem to be crucial for achieving the funding goal.

FundedByMe is one of the only full-service crowdfunding platforms offering capital through equity, debt and reward based crowdfunding which has funded some 500 companies from 25 countries. The report analyses such factors as usage of various social media, the background of a company’s team or documents uploaded.

One of the main conclusions is that placing a link to their Facebook or LinkedIn on a company’s pitch page on a crowdfunding platform increases the probability of success more than 30% (31,37% for Facebook and 32,58% for LinkedIn). Furthermore 10 likes on the company profile of any of those social media portals adds additional 6% for the success (6% on LinkedIn and 5,6% on Facebook).

Another important factor is the types of documents delivered to the crowd. Reliable market statistics can help by 27% and an upright financial forecast by even 37,3%.

Lastly entrepreneurs pay attention to the background of team. If a member has a background in management and/or consulting this helps company by 26%. Relevant business education can have an influence on a company’s success by 25%. Surprisingly, possessing a master’s degree or previous entrepreneurial experience is not regarded by investors as something relevant.

“That doesn’t mean that fulfilling only one of the conditions will automatically bring you the relevant amount of money. We analyzed a dependent variable binary and checked either successful or unsuccessful outcome. Successful outcome was defined as reaching 80% of the initial funding goal” say Alina Lundqvist and Michal Gromek from FundedByMe, the authors of the report.

The report was based on the analysis of all equity crowdfunding campaigns from the Nordics, run on the FundedByMe platform since 2012. FundedByMe has 83% of market shares in equity in Nordics. The CAGR in equity crowdfunding at FundedByMe was 449%.

“The average amount raised per campaign is €122,706. The average investment amounts €5,935. Statistically there are 46 investors in a campaign” – explain Alina Lundqvist and Michal Gromek.

The European equity crowdfunding market size (excluding UK) was worth €82.56 million in 2014. The CAGR for the industry between 2012 and 2014 was 116%.

How do you get money for your business? Short crowdfunding course

How do you get money for your business? Short crowdfunding course

Crowdfunding, crowdsourcing, crowdlending, reward-based crowdfunding, equity-based crowdfunding, loan-based crowdfunding… – so many names! And how should you choose which are relevant for your business and your needs?

Relax, it’s easy! FundedByMe with Eliademy, have prepared a simple educational training, which helps you to learn everything you need to know about crowdfunding and even more important: how to get money and added value from it.

During the crowdfunding course you will receive basic knowledge about:

  • various types of crowdfunding campaigns
  • tools that facilitate a successful crowdfunding campaign
  • techniques that improve long-term relationships with your crowd

Go to Eliademy course button 157x43 px

This crowdfunding course by FundedByMe and Eliademy is dedicated to:

  • entrepreneurs who have a business idea
  • representatives of small or medium sized enterprises from all over the world
  • those who want to acquire financing to realize their dreams
  • those who want to improve their skills in crowdfunding and receive a diploma.

Give it a chance and see why so many goal-oriented entrepreneurs and those who wanted to realize their dream fell in love with crowdfunding. See the opportunities they discovered.

Go to Eliademy course button 157x43 px

What do investors look for in a pitch deck?

What do investors look for in a pitch deck?

More entrepreneurs are moving to a pitch deck format, tackling the biggest questions and trying to digest the idea behind their company as quickly as possible.

All the reference photos are taken from AirBNB’s first pitch deck.

Elevator Pitch

A quick one-liner summary that combines your vision/product and the mission of your company

Keep it short and memorable

  • Try: making it relatable… as in “We are X for Y”
  • (“We are AirBNB for Event Spaces”)
  • (“We are Tinder for grannies”)
  • (“We are the Starbucks of Frozen Yogurt”)

Elevator pitch

Team

  • Highlight key team members and their prior positions, successes, domain expertise
  • Demonstrate relevant experience
  • Which roles are the keys to success in your company/space?

The Problem

  • Define the real problem that you’re trying to solve.

the problem

The Solution

  • What solution are you creating and how will this solve the problem mentioned above?

the solution

Market validation

  • Show your timeline and milestones to date
  • Growth metrics are key at early stage

Market validation

Market size

  • Define Your Market: What business/space you are in
  • Total Market Size: Dollar Size, Your Place/Niche
  • Customers: Clearly define exactly who you serve
  • Macro Trends & Insights

market size

Product

  • Tell the story of your customer and how customers use/value your product or service
  • Images and visuals are better than lots of text: show don’t tell

the product

Business model

  • Who is your primary customer & how do you make money?
  • What is the pricing / model?
  • Revenue and number of customers to date.

business model

Market adoption

  • Highlight press, partnerships, accolades
  • Customer success stories and/or testimonials

market adoption

Competition

  • Where do you exist in the larger overall Market Space?
  • What are your Advantages?
  • How is your place in the market unique to you, and the right one for your company growth and customers?
  • Who are the competitors, why have they succeeded, and how do you truly differentiate from them?

competition

Investment ‘Ask’

  • Who are your existing & notable investors, if any?
  • What are your key Use of Proceeds (as % of total raise)
    • Founder salaries
    • Sales & Marketing
    • New hires
    • Technology / Product or Service development
    • Capital expenses / equipment

FundedByMe offers you the ability to create your presentation and present it to investors online. Make sure you structure your campaign to tackle most of these questions, that way you will maximise your fundraising round.

Downloads available:

Campaigns that incorporate this in the right way

All pictures are sourced by BusinessInsider and the original pitch deck can be found here.

The art of company valuation

The art of company valuation

One of the most common question we get is “How do we valuate our idea or business” or “How can I know if this company is correctly evaluated”.

How to correctly assess the value of a company is virtually impossible. A good valuation to one person might be seen as hideous by another. FundedByMe will never judge the valuation of any of the companies seeking capital through its system, however, we can try and educate our visitors, enabling them to make smarter decisions.

Rule No 1.

The correct market price is what the market is willing to pay. This does not mean that the market is correct in its assumption regarding future returns or growth in asset values. The well-known US investor Warren Buffett put it correctly when he stated: “Price is what you pay. Value is what you get.”

So, it is hard to judge at the time of investment whether or not you will see your fortune melt away or grow at a tremendous rate.

Rule No 2.

Remember that the offerings on FundedByMe has been priced by the seller, not through a market-driven process. Even though the so-called pre-round exists for the reason to let prospective raisers of funds get feedback from potential investors, there is no guarantee that insights gained through the pre-round results in a correctly priced offering.

Rule No 3.

Always remember why you invest. At FundedByMe we like to talk about Value From Investment (VFI), which is all those things you get out of your investment. Financial returns can be one, but it might also be the joy of supporting an individual you like, a context to exist in, a good story to tell your friends, products you like, possible discounts, etc.

Rule No 4.

You are solely responsible for any investment decisions. It is risky to invest in unlisted stock. You might never see your money again and it can be hard – not to say impossible – to sell stock in such companies. But then again, some will make it big and pay back handsomely.

Rule No 5.

Be prepared to loose everything.

That being said, the question remains how to correctly assess the value the entrepreneur says his or her company has. Rest assured that the entrepreneurs are optimistic – that is why they became entrepreneurs in the first place – but sometimes their expectations seem sky-high.

Please bear in mind that many of the companies on FundedByMe seek funds in order to grow, sometimes very aggressively. High growth affects the future value of a company very positively.

Other factors, besides growth, you should look for are:

–       Cash flow

–       Margins

–       Strategic position and potential in their sector

–       The existence of patents or trademarks (can be very important)

–       The team (most early stage investors would say that this the only thing they are looking for)

–       Realistic expansion plans

–       Competition

–       Risks they are facing

–       Traction (high growth in user base, increasing sales, press reports, etc.)

Please also think over what you, as an individual, can bring to the table. After all, crowdfunding is only partly about the funds a company can raise. It is also about the networks the companies can amass and as an investor you are part of that network.

Your own individual experience from a sector or a specific type of investment might guide you well but please also be an active information seeker, for instance through the Internet, but also by asking other FundedByMe investors. Crowdfunding is, after all, all about the crowd.

If you want to drill down into specific valuation models, there is a vast territory to cover and we at FundedByMe will not recommend a specific one. Rather, read books, blogs and news reports. One good book to start with is “The Financial Times Guide to Valuation”:

http://www.amazon.co.uk/Financial-Times-Corporate-Valuation-Guides/dp/0273729101/ref=sr_1_3?s=books&ie=UTF8&qid=1367232773&sr=1-3&keywords=The+Financial+Times+Guide+to+Valuation

It has been written by David Frykman and Jakob Tolleryd, who themselves are Internet entrepreneurs and investors.

Please also note that valuations differ enormously from sector to sector and from time to time. To get a hunch of what the situation is like right now you can always try and compare key numbers with those of listed companies in the same sector.

Daniel Daboczy – FundedByMe

Entrepreneur tips – Building a crowdfunding campaign

Entrepreneur tips – Building a crowdfunding campaign

Over the coming days we are going to share a number of tips to help all FundedByMe entrepreneurs in building a crowdfunding campaign – inspired by this great list compiled by Indiegogo. We’ve added our own European-focused sources and will continue to grow this list as a resource for all crowdfunding entrepreneurs. If you have any tips that can help others who are just starting on the journey of building a crowdfunding campaign, please leave a comment and we will ensure it gets added to this list!

Building a crowdfunding campaign

These tools are helpful for building your crowdfunding campaign and will ensure that you have the marketing power to bring your campaign to a successful close!

Campaign Video

Video Hosting

Blog

The blog hosts below can be a great supplement to your communications strategy given their large communities of bloggers, which you can tap into and engage with — spreading your campaign beyond your network.

Landing pages:

If your idea does not yet have its own website, create a simple landing page from which you can capture supporters’ email addresses or share your contact information. Use any of the following free options.

Social Media:

  • Facebook Pages — Creating a Facebook Page for your campaign is a great way to engage your backers and investors and spread the word about your campaign via social media. It also creates the perfect platform from which to share updates about your campaign and share event information with your fans.
  • Google+ — Creating a Google+ Page for your campaign can help with your Google rankings and also targets a different audience than Facebook.
  • Twitter — There is a huge conversation about #crowdunding on Twitter — as well as others that might have relevance to your particular campaign. Whether you start a handle for your campaign or your own personal one, getting involved in this conversation can bring a big boost to your campaign. Check out some of their best practices.
  • Pinterest — A great place to get involved in the conversation around the topic(s) of your campaign — as well as a place to share pictures relevant to your campaign.
  • Instagram — Picture sharing is the name of the game on Instagram. Campaigners have used it for everything from sharing pictures of perks to snapshots of their campaign page. Make sure to use hashtags like #crowdfunding or #FundedByMe and include a link to your campaign when you post!
  • LinkedIn – Reach a professional crowd using LinkedIn – and if you don’t have an account here yet, create one. It helps a ton with credibility and in building trust and quality.

Shortened Links — When sharing a link to your campaign in social media, save space by shortening the link.

  • Bit-ly — Bitly’s tracking tools to see how many clicks you’re getting and from where. You can easily edit the bit.ly link you end up with too to make it memorable.
  • Ow.ly – Similar to Bit.ly, you can easily shorten and share your url.
  • Goo.gl – Another great free offering from Google.
  • TinyURL – One of the more well-known url shortener services.

Music Sharing

These are great ways of sharing your music with potential contributors and also of finding free – or affordable – music to add to your campaign video

Photo Editing

  • Fotoflexer – Edit photos using this free and user-friendly platform

Infographics

An Infographic is a great way of illustrating elements of your campaign.

Slideshows

  • Slideshare — A good way to share your campaign presentation with the social community of Slideshare.

If You Need an Extra Hand – Virtual Assistants

So what are you waiting for? Get started with building a crowdfunding campaign on FundedByMe today. And if you have any additional resources that we should add to this list, please leave us a comment!

Entrepreneur Crowdfunding Tip of the Day – Blogger Outreach

Crowdfunding Tip blogger outreach by Kristen Matthews

Have you identified a list of bloggers that would be interested in what it is that your campaign is all about? You really should. Blogs are a great way of accessing people with similar interests to yours. Start by doing a Google search using “Blogs + a key word that relates to your industry” and you will be surprised at what you discover! Remember that bloggers are people like you…so when you approach them to talk about your campaign on FundedByMe, keep your email personal, short and informative.

Remember to include the following:

– Your elevator pitch, explaining what your brand does

– Add a good photo that would entice them to share it with their readers

– If you have a video, include a link to that

– Add a link to your campaign on FundedByMe

It’s okay to ask them to help you share awareness around your project! If you’re nice enough, most bloggers will be happy to help. But never spam a blogger! If they don’t reply, accept it and move on to another. Good luck!

What is your top crowdfunding tip? Why not share it with us in the comments? Also, read this great article by Kristen Matthews about blogger outreach.

Mashable’s 10 tips for an awesome crowdfunding campaign video

Mashable is a great resource for entrepreneurs wanting to learn new, helpful tips – including things that could help improve your crowdfunding campaign video and presentation on FundedByMe! I spotted this tip list to help you shine on the camera and had to share them here to ensure you are ready to record the best crowdfunding campaign video possible. For Brandon Smith’s full article on Mashable, please click here.

From Mashable: Jared Matthew Weiss had a regular spot on The Today Show, a column in Shape Magazine and has consulted over 800 clients worldwide on how to reach their potential. He founded Overture, a company that produces short, chic black-and-white videos designed to capture your story and share it with the world. The personal branding expert was kind enough to sit down and share 10 important tips that will help set your personal video apart from others.

Flip Video Cameras are great for shooting crowdfunding campaign videosImage from Flip.com

10 Tips for Being Awesome on Camera

How You Look

1. Wear Clothing That Makes You Feel Good About Yourself

Have some fun with your wardrobe and be sure it reflects your personality. Choose comfortable clothing that showcases the real “you.” To make a slightly more formal statement, a suit and tie or blouse and skirt is perfect. Keep jewellery to a minimum. Feeling good about yourself is key. And it will show.

2. Mom Was Right: Sit Up Straight

The camera exaggerates everything because there is nothing to distract the viewer. If your posture is poor, viewers will think you’ve checked out and lost interest. Your body should convey your energy and intelligence without being stiff and robotic.

3. Watch Your Body Language — Everyone Else Will

Weiss speaks from personal experience on this one. Throughout his first live television segment he was unaware of the fact that he was impulsively rubbing his leg to calm his nerves. Find a good place for your hands so they aren’t distracting to viewers.

4. Smile With Your Eyes

A warm and genuine smile does wonders for coming across as sincere and confident. But flashing those pearly whites is only part of the key to smiling. The eyes can dictate whether a smile is real or forced. In this case, crow’s feet can be a good thing.

How You Sound

5. Use Your Natural Voice.

While some of us admit to practicing our news anchor voices, leave that “Good evening, Mr. and Mrs. America” voice at home. Be yourself and speak to the camera like it was your best friend. Not only is it more natural, but it’s what people expect. You want your video to reflect who you are, not Brian Williams.

6. It’s How You Say It

You know what you’re talking about. So focus on how you deliver the goods. Pacing matters. If you rush through your spiel, you throw away your credibility. The message you deliver is: what I’m saying doesn’t really matter. Your choice of words is also key. Simple and clear beats a multisyllabic mouthful any day. Enunciate and avoid slang at all costs. Shakespeare didn’t write “ta be or not ta be, dude.”

How To Prepare

7. Look At The Camera As You Would Your Dog

Don’t be afraid of the lens — it won’t bite or even lick you. Just look into it with the love you’d give a welcoming pet at the end of the day. Don’t look around; darting eyes scream, “I’m nervous and desperately searching for the exit!” Blink naturally; excessive blinking signals a lack of sincerity. Don’t be afraid of flubs, either. That’s why we have editors.

8. Keep It Moist

Dry mouth is the enemy of talking. Get that frog out of your throat with a sip of water. Taking a water break can also be a way to step away from the camera and calm your nerves. And keep your lips moist with something other than your tongue!

9. Chill

Don’t go in front of a camera full of nerves and sweaty palms. Do whatever is necessary to help you relax — stretch, do jumping jacks, listen to music, go into the bathroom to talk to yourself. Sit in front of the camera only when you’re feeling calm, cool and collected. It will add to your confidence.

10. Breathing Is Good

Not only is it essential for life, but breathing is necessary to be awesome on camera. Take deep breaths before you go live, and continue to breathe easily when the camera’s on. If you find yourself breathing or talking too quickly, it’s time for a break.

Unless you are portraying a character or alter ego, it’s important to be yourself while on camera. This is especially true if you are using the video to market yourself. Allow you and your personality to flourish and embrace the moving frames.

The Crowdfunding Bible – top tips for crowdfunding entrepreneurs

The Crowdfunding Bible – top tips for crowdfunding entrepreneurs

Not everyone has the brand and name recognition of Mick Jagger or Steve Jobbs. So how does your crowdfunding campaign get funding when nobody knows who you are or what you are capable of? Games journalist and tech writer Scott Steinberg may have the answer you seek in his wonderfully researched book on the art of crowdfunding called “The Crowdfunding Bible: How to Raise Money for Any Startup, Video Game or Project.”

The crowdfunding bible - tips for entrepreneurs

The book gives readers the inside track on the best practices for getting your reward-based crowdfunding campaign funded through crowdfunding services and his tips include crafting the perfect pitch that will get the attention of the right people, creating the best rewards for funders, advice on the best way to market and promote your project outside your crowdfunding platform, and expert advice from those individuals who have found the most success in getting funded. There are some great case studies and really helpful tips.

Best news? You can download this amazing resource for free via www.crowdfundingguides.com. So, what are you waiting for?