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

 

Announcement Brokerstars

Some weeks ago we received worrying reports from investors in Brokerstars, who crowdfunded on FundedByMe April 2014, we have since tried to understand the problem by proactively reaching out to the entrepreneurs through various channels with no success.

What we have received is some inside information, but we cannot confirm whether the information is true or false.

What seems to be a fact, however, is that due to a fall out between the founding team members they have not delivered on the plans set out. Unfortunately we believe this means that Brokerstars can be considered a failure.

It is therefore our duty as an open and transparent platform to inform you about this.

What have we learnt?
Investor relations and communication is key in any company and by not communicating with your network properly you do not only miss out on opportunities but in dire times this can mean the difference between being able to cope or to fail. Furthermore, by not communicating, you risk your reputation. Failing is one thing, but failing from the wrong reasons something completely different.

Moving forward we will now start to develop a plan that will involve all future entrepreneurs. Most likely a binding contract or clause holding them to a communication plan. Investors putting their trust in entrepreneurs should never be kept in the dark.

For more information the former CEO of Brokerstars Jesus M Santos has made himself available and can be reached via email – txsantos@gmail.com

Please note that mr. Santos is not responsible for the failure rather the one most willing to cooperate.

Mormor Magdas Ice Cream success story

Who can turn the opportunity to own shares in their own favourite Ice Cream factory. (some even bought them as gifts for their kids)

FundedByMe

 

The Swedish magazine “Entreprenör” published recently a column describing how crowdfunding looks from an entrepreneur perspective. The author – Angela Håfström – is the CEO of the company called Mormor Magdas. In March she closed successfully her crowdfunding campaign at FundedByMe, raising €180 000 for  ca. 18% of shares of the company.

Not every successful campaign needs to be closed and overfunded in first couple of days. Mormor Magdas was live at  the FundedByMe platform for 45 days. In fact what counts is how much money you raised at the end, not how fast you did it.

“It was a bit scary during the time of the campaign. Some days were good, others were terrible and we felt that the campaign could not be so successful as we expected. But the last week was like a huge wave! It turned out in the end that there were many who wanted to become investors. In the last five days we reached 101 percent of our funding goal, while the first 40 days brought us only 39 percent.”

Mormor Magdas also benefited from non-financial advantages of crowdfunding.

“You can imagine yourself the positive impact it can have for our brand. Together with our shareholders we are really stronger. For hand on heart – it is thanks to the crowd the 142 new partners that Grandma Magdas Därproducerade ice cream is available today in many more places then before. Thanks to this, we can now keep growing, continue to create jobs and revolutionise the market with real, honest, tasty ice creams. This is what is called a success story!”

Read the whole article “So I managed crowdfunding” at the “Entreprenör” website.

 

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.

FundedByMe Discusses Crowdfunding with the Swedish Government

FundedByMe Discusses Crowdfunding with the Swedish Government

How to make companies in Sweden more competitive? What are the main obstacles they face and how to make the business environment more entrepreneur friendly? – these were questions Pontus Frohde, COO of FundedByMe discussed, with Mikael Damberg Minister of Commerce & Business (näringsminister) and Magdalena Andersson, Minister of Finance (finansminister).

We talk with entrepreneurs, far beyond Sweden, on daily basis and we know the reality of their experiences very well. You could even say we cut our teeth on helping them. And we think we are successful in this area – raising money for others is our core business.

We won a Global Award for Crowdfunding Firm of the Year 2015 by Finance Monthly and was announced one of the hottest startups in Sweden by Veckans Affärer. Behind these successes there is the hard job we do every day. FundedByMe is run by entrepreneurs as well. For other entrepreneurs.

That’s why we believe our contribution is valuable in creating a next Silicon Valley in Europe.

Asia – a new big thing

Asia – a new big thing

“It seems Asia has been bitten by the crowdfunding bug” – wrote Mary Ann LI. Reyes in “The Philippine Star”. Well, she’s 100% right!

FundedByMe has stepped into South East Asia last year .The timing turned out perfectly enough to let the company settle down a bit, gain momentum and take the leading position in shaping the crowdfunding industry.

Just in May, FundedByMe with CoAssets and New Union has formed a new three-party crowdfunding alliance in Singapore. With a combined record of S$200 million dollars raised through crowdfunding campaigns in 2014 and growth expected to accelerate in 2015, the three-party alliance has set its sights set on paving the way for FinTech to flourish in Asia.

The alliance is based in Singapore as a hub for the region, because of the business climate and favor of local authorities for entrepreneurship. Also the understanding of crowdfunding phenomena is raising there. In February the Monetary Authority of Singapore published a consultation paper, setting out proposals and clarifications to facilitate and better regulate how corporates may have access to alternative sources of funding through equity crowdfunding.

Right now the consultation is still pending but this month, good news came from Malaysia. The Malaysian Securities Commission as the first of this type of institution in the region offered equity crowdfunding licenses. FundedByMe and it’s partner Alix Global Sdn Bhd, have been awarded one of six of these licenses! The license allows FundedByMe to start operations in the new market.

That’s not the end. Djenee, a start up focused on personal on-demand digital concierge service raised almost S$500,000 on the first day of the campaign on FundedByMe. The campaign set a new standard for equity crowdfunding in Asia.

“We’re extremely excited about partnering with Djenee to raise their very first round of funding, which broke records for Asia and with investors from all around the world. This is a start for crowdfunding in Asia and we expect South-East Asia to exceed US$1 billion as a market by itself in the next few years. FundedByMe will give companies a global stage for companies in Asia to find investors, so that these companies accelerate and build powerful momentum from day one,” said Daniel Daboczy, CEO and Co-Founder of FundedByMe.

 

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%.

FundedByMe: Crowdfunding Firm of the 2015 and one of the hottest startups in Sweden

FundedByMe: Crowdfunding Firm of the 2015 and one of the hottest startups in Sweden

To the 53 000 investors on FundedByMe; to the representatives of nearly 500 companies who have raised 100 000 000 SEK via our platform to improve your business, and to our followers, shareholders and stakeholders! We want to tell you one thing: YOU ROCK!

Today FundedByMe won the Global Award for Crowdfunding Firm of the Year 2015 by “Finance Monthly”. Just one business day ago “Veckans Affärer” listed us amongst the hottest startups in Sweden. Last week we broke the record in crowdfunding for the fashion industry. Carin Wester – a fashion company raising funds on the FundedByMe platform – raised the first 1 100 000 SEK in the first 7 hours. After 2 days investors committed 2 000 000 SEK to purchase shares. The campaign is still live and open for investments.

We would not have these successes without you. So from us to you, the FundedByMe team want to say one thing more: thank you for using our platform and supporting us in our journey.

congratulation letter

FBM at VA #21 hottest startup

We started with reward-based campaigns, then we started to offer equity-based crowdfunding opportunities. In February 2015 we launched loan-based crowdfunding (also know as debt-crowdfunding). Offering three types of crowdfunding campaign types makes us one of the unique platforms in the world. Furthermore, we are the only crowdfunding platform of Nordic origin that has branches in 6 countries on 2 continents. Users on FundedByMe come from 70 countries and the network is exponentially growing. So far the company has successfully funded some 500 companies from 25 countries.

 

Quick Facts about FundedByMe:

Founded: 2010

Co-founders: Daniel Daboczy, Arno Smit

No. of companies funded: 500

No. of countries companies originate from: 25

The amount raised so far: 100 million SEK

No. of investors: over 53 000

No. of countries investors originate from: 70

Possession of equity crowdfunding market in the Nordics: 83%

Awards: Finance Monthly Global Award, hottest startups in Sweden by Veckans Affärer”, Winner of the White Bull Bully Award. Winner of the prestigious Best Service Provider award. One of Wired UK’s top 100 startups. Nordic Best Service Provider, Startup Awards. One of the top 100 websites in Sweden by Internetworld. Winner of Digital Winners award “No guts – No glory” by Telenor Norway. Winner of Sollos Memorial fund for “An entrepreneurial initiative worthy of encouragement”.

Carin Wester beats a record in crowdfunding for the fashion industry

Carin Wester beats a record in crowdfunding for the fashion industry

Carin Wester – a Swedish fashion brand running its crowdfunding campaign on FundedByMe – has raised the first 110 000 euro in the first 7 hours. After 2 days investors committed 200 000 euro on its shares. This is almost half of the crowdfunding goal needed for global expansion of the brand.

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Watch the 5 minute video pitch by Anton Granlund, CEO of Global Retail and a major shareholder of Carin Wester

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This was the fastest raised 110 000 euro via crowdfunding in the history of clothing brands in Europe. Only 7 hours were needed to achieve this milestone. The next hours were comparably successful – after 2 days investors declared to spend double as much for the company’s shares.

Carin Wester, one of the so called Swedish fashion wonders, known for unique forms and silhouettes combined with premium materials – needs capital for its international expansion. A year ago Global Retail came in as an investor and management of the company with the aim of creating growth and profitability. Very shortly the company is opening its brand stores, mainly in Scandinavia, Germany, Japan and Bennelux, as these markets already perform well.

However, the company did not choose to go the traditional route, by trying to get the attention of major investors or venture capital companies. The more natural choice for them, turned out to be a crowdfunding – a way of raising funds that’s increasing in popularity, allowing a group regular people to individually invest small amounts in exchange for shares of a company. This method is very well suited for companies that already have a finished consumer product – something that anyone can relate to, see and feel.

“We want to partner with people who love our brand, like our existing customers who are good ambassadors and want to make this trip with us and also highlight our brand to possible new customers,” says Carin Wester, the founder and creator of the brand. She believes that this is the future way to seek investment and that more will follow their example.

“The secret of the success of the crowdfunding campaign by Carin Wester lies in their perfect preparation. They treat crowdfunding as their next marketing campaign, which it is. Building tension in social media, catching attention of journalists, refreshing information on their website – all these elements pay their dividends now. Crowdfunding allowed the brand to reach new customers and achieve the snowball effect” explains Daniel Daboczy, CEO and co-founder of the FundedByMe platform, on which the Carin Wester crowdfunding campaign is listed.

In the 10 years since the Carin Wester brand was founded, it has won numerous prestigious awards in its home market. Recently the company experienced a number of changes: the company structure was optimized, more focus was put into sales and services, products are more balanced between commercial and high fashion and all costs has been reviewed.

“Now we can see, we are facing the right direction and are ready for the next step in making Carin Wester more accessible to a wider market. This sales season is becoming a huge success with an increase of at least 200% compared to the previous year, which is proof that the changes made have had a positive effect. Long-term a turnover of 25 million EUR within 10 years is expected” says Anton Granlund, CEO of Global Retail and a major shareholder of Carin Wester.

Global Retail Group was founded in 2007 and has since then mainly successfully introduced and expanded a retail business together with G-Star Raw. Global Retail has focused on building the strongest sales force in Sweden and has for three consecutive years (2013-2015) been ranked the number one service provider in fashion retail. Alongside operating stores, Global retail has also successfully performed several consulting assignments, for example for Björn Borg.

Eggs Inc – this is how history began

Eggs Inc – this is how history began

This the history of how Eggs Inc was laid: a journey to France and discovering a niche. Five years later you can visit the world’s first healthy fast food restaurant on Regeringsgatan 26, Stockholm. 

– I wanted to open a restaurant but I can’t cook. It took me about a year to figure this out and find Andreas Hedlund, the Chef of the Year in 2002, Fredrik Önrup, the revenue manager, and Kent Jonsson, the egg farmer – says Dan Lorentzon, founder of the Eggs Inc.

What was the most difficult part about setting up their business? Well, you may be surprised: finding a location for their restaurant. Landlords usually prefer big players with well recognisable brands.

A survey from Svenska Ägg, the Swedish trade association of companies operating in the egg industry, says that 97 percent of Swedes like eggs. This means there is huge demand. Because of the nutritional value of eggs and the fact that Eggs Inc. doesn’t have direct competitors, the perfect recipe is created for a dynamically growing business. That’s why they plan to develop a larger franchise chain in Scandinavia first and then the rest of Europe.

Watch the short video about Eggs Inc.: