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

 

Equity Crowdfunding Entrepreneur Q&A – Claes Stenmark of Virtuous Vodka

Virtuous Vodka co-founder Claes Stenmark is unique. That much is clear as soon as I get the response to my email asking him to participate in our popular Q&A feature on the FundedByMe blog. “Sure,” it reads, “But let’s do it over lunch instead”. And that pretty much summarised Claes right there – no frills honesty, a whole lot of passion and this unique drive to connect with the people around him, coupled with a burning ambition to make the world a better place. “There’s so much fake in the world, I want to help move us towards a planet that is more real,” he says while scratching his trademark beard. And, sitting across the table from him, I can’t help but believe that he is going to do that. Claes Stenmark is going to change the world into a better place. And successfully launching the ecological, natural-flavoured Virtuous Vodka into liquor stores around Sweden is only the first step in this process!

Claes Stenmark of Virtuous Vodka at the manufacturing distillery

Introduce yourself – what is your background, what are you passionate about and what are your hopes and dreams?

World domination. Through real flavour! At Virtuous Spirits (the holding company for Virtuous Vodka) we strive for a fake-free world. We want to touch real people. Provide real – and great – products. Be honest. And help everyone take responsibility towards the effect that we are having on our planet. I was born and raised in Sweden and have just always loved flavours. My mom tells the story of fetching me from daycare when I was four or five and asking me how my day was and what I had for lunch. When she then asked me how lunch was I replied, “Good fish meal, but they forgot to put wine in the sauce!” I mean, this was in the early ’80s…no one cooked with wine back in the ’80s! But in our family cooking and flavours was part of the make-up. My grandma and I spent hours together in the garden, picking herbs and then washing, chopping these…those are some of my best memories.

Virtuous Vodka - six flavoursHow did the idea for Virtuous Vodka come about? Describe it to us.

While at university I started working as a chef – it was the perfect job for me as it allowed the opportunity to explore my love of food and also helped pay the bills. After finishing university I ended up working in advertising and filming for a number of years, longing for the day where I could start my own business and, somehow, rekindle my love for flavours and cooking. Opening a restaurant was the natural choice, but the long hours, along with the sheer number of great restaurants already out there, didn’t really appeal to me. I wanted to make a difference and bring about change…

My brother-in-law is a super entrepreneur from Cuba who fled to the Soviet Union in the ’90s and was living in the Brazil at the time. We were always talking about different business ideas and I one day emailed him an idea to create an ecological vodka, flavoured with only natural ingredients. His responses always came back swiftly, but on this one he was quiet for a few days. When I finally pushed him about not replying to my email the response came back with a resounding ‘YES’! Fast-forward a couple of months and he had quit his job and relocated to Sweden and we were focusing all our attention on creating and launching Virtuous Vodka.

Virtuous Vodka Jimmy's Passion cocktail

Why did you decide on crowdfunding? What about FundedByMe appealed to you?

We see crowdfunding as marketing…Yes, the money was key, but the bigger motivator was getting this captive audience who tasted our product during the process when we invited them to tasting events, who became shareholders in our business and who would, today, move heaven and earth to help us succeed. That’s the power of crowdfunding! FundedByMe was a natural choice for us as it’s the largest player in Scandinavia and the platform was just launching equity crowdfunding, so we got lots of attention for being the first consumer brand in Sweden to raise funds this way. The fact that the team got really involved (I think most of them invested in us!) and that they really opened up their network to help improve our competencies was awesome.

Today Virtuous Spirits employs three of us full-time. Additionally we have about a dozen people putting in long hours and an additional 117 ambassadors spreading awareness and helping us out by connecting the Virtuous brand to their networks… It’s awesome.

The Virtuous Vodka delivery bike in Stockholm

What was the best part about running a campaign on FundedByMe? And what was a challenge?

The equity crowdfunding phenomenon in and of itself is probably the highlight. The FundedByMe team was super approachable and easy to talk to, helping us along the way and becoming our biggest fans! The challenge is the amount of work it takes to really make an equity crowdfunding campaign succeed…uploading a strong presentation is only a small part! Once your campaign goes into Pre-Round the actual work starts. We contacted a lot of press to help educate the world about our product. When you launch a new concept, in our case naturally flavoured vodka, education is key. We also hosted four exclusive tasting events to potential investors and I’m proud to say that 25% of the people who tasted Virtuous Vodka became investors in our brand.

Virtuous Vodka shots lined up

Would you recommend other entrepreneurs to consider crowdfunding – and FundedByMe – for their financing needs? Why? Any tips or advice to those considering it?

Do it! Have a good pitch. Show how you plan to make money. Explain your product or service in a simple way. Have a great elevator pitch. Then work it. Be accessible. Be proactive and don’t be shy to talk about your campaign. It’s all about how you explain your brand and you have to get to the point very fast!

Virtuous Vodka founder Claes Stenmark showing what happens when everything is done the 'eco' way with real berries for flavouring!

Now that your crowdfunding campaign has closed, what’s next?

Well, we just got accepted to sell through Sweden’s Systembolaget, the nation’s only liquor outlet. We are working on exporting our product outside of Sweden and are establishing relationships with wholesalers in key markets. Right now our next batch of ecological vodka is macerating (that’s a fancy word for ‘infusing’) at our production facility in Nynäshamn, 60km outside of Stockholm.

The real work is just beginning.

Equity Crowdfunding on FundedByMe – a visual explanation

Everyone is talking about Equity Crowdfunding and, while you may “kind of” understand the concept, we thought this great visual explanation of crowd equity, created by FundedByMe friend Peter Sandberg would be spot on.

FundedByMe Equity Crowdfunding Explained - by PoppeTotte

What do you think? Click here to explore some of the trending equity crowdfunding rounds on FundedByMe right now!

In the News: Nerdy by Nerds: A ShopFactory Concept – Denimhunters

Nerdy by Nerds Jeans on FundedByMe crowdfunding platform

Hand made jeans sewn right before your eyes in a ShopFactory. That’s the concept of Malmö-based Nerdy by Nerds. With a stabile business plan and a great deal of commitment the three friends who coined the concept in the fall of 2011 only needed a little help finding the funds to realise their idea. This is why they submitted the Nerdy by Nerds project to FundedByMe to find people who are willing to invest in helping them establish their ShopFactory. And this fall the concept will become reality.

via Nerdy by Nerds: A ShopFactory Concept – Denimhunters.

Crowdfunding Investor profile – Angie Skazka

My favourite thing about crowdfunding investor Angie Skazka is that this case proves again that anyone – even a student – can become a business angel and invest to become part of the next big thing. We asked Angie to participate in our popular crowdfunding investor profile session and convince you why you too should consider this modern type of investment!

Angie Skazka is a crowdfunding investor on FundedByMe

Angie, introduce yourself – what is your background, passions and ‘day job’?

I am 24, Russian-Swedish. I graduated from Ural Federal University as an engineer (5 years) of Industrial Automation and Control Systems. Then I spent 2 years at Real Time Soft, Yekaterinburg, as a SCADA designer and automation developer. At that time I created automated dispatcher systems for ridiculously huge and dangerous ore-processing plants. Particularly enjoying creating user interfaces, I then switched my focus entirely to it by studying on my own and working part-time as a UI-designer in Ocean bank, Moscow. I designed user interfaces for online payment agent Robokassa (Russian analog of Klarna), which are used nowdays by over 10k customers per day and over 22k merchants overall. I also did a year of PHD in Russia, but I quit because I hate research.

Now I am a master student of EIT ICT Labs, studying Interaction Design with first year at KTH and second year in Aalto University, Helsinki. My professional interests include user interface design, infographics, graphic design and entrepreneurship. I aim to build awesome interaction for specific usage contexts and enjoy creating cool data visualizations.

Currently I am a co-founder and usability troll at RunTroll, a real-time multiplayer game that makes it fun to run (I mean physically, with your legs). I believe that entrepreneurship is a way to bring more long-term value to society, and my social aim within RunTroll project is to get people away from computer and TV screens to exercise and be healthy. I spend my free time in Solna climbing center or out in mountains, traversing the snowy peaks and glaciers.

 

How did you first get familiar with crowdfunding and why does it appeal to you?

Daniel the CEO of FundedByMe gave a guest lecture at KTH in one of our courses. Crowdfunding appeals to me because I can invest small amounts of money and get equity in early stage companies before they became ridiculously expensive. Also openness, involvement, connection to startup frontier, networking.

 

Which project(s) on FundedByMe did you invest in? What made you want to get involved?

I invested in FundedByMe and Nerdy by Nerds. The first one has a great idea and promising return, the other one is cute. Unfortunately I missed fire alarms by Elinnovation.

 

What do you expect to get out of these investments on the long run?

I want to sustain myself with return on investments and run my own creative projects without a need to work for money. I want to learn how to invest, get experience, get a network so that I can possibly work or cooperate with people involved in startups.

 

What is the most important tip you’d give other investors considering crowdfunding?

A crazy one: don’t spend weeks of your time to do a proper evaluation. Instead go for quantity with small sums. As long as the revenue model is clear you are pretty much fine to go.

 

Are there any new investment rounds on FundedByMe that you have your eyes on at the moment?

Yes, I am looking mainly for physical stuff: Garpenbergs castle is interesting, Mutewatch already proved their idea with sales, and Rosey is quite close to me since I am a (former) automation engineer.

Crowdfunding Investor Q&A – Meg Charles-Horn

There is no better way of getting the facts about crowdfunding than from a crowdfunding investor – someone who passionately believes and supports it. When I recently ran into Meg Charles-Horn, who invested in the recent FundedByMe Equity round, I asked her share her views with us. Meg was happy to comply!

Meg Charles-Horn is a crowdfunding investor on FundedByMe

Can you briefly introduce yourself, Meg? What is your background and what are you currently working on?

I moved to Stockholm from New Delhi, India about 18 months ago where I was doing strategy for a foundation focused on building schools in rural India for girls.  I am a US-trained telecom/corporate lawyer and have worked as a partner at a major US law firm, Head of Strategy of a Telecom start-up and have held leadership roles in a global telecom company as well as the GSM Association in London.  I am always looking for new challenges and opportunities to excel – both personally and professionally – and I am passionate about sharing my experiences and knowledge to help others achieve their goals.  With the transition to Stockholm, which is such a vibrant entrepreneurial community, I decided it was time to use my knowledge, experience, skills and a little money to help create new companies. Currently I am an investor in two US-based start-ups – one is Keoyo where I am co-founder. We make ‘@holla’, a social communications app that will launch next month.

FundedByMe is not only my first Swedish investment, but it is also a “passion investment”.  I fervently believe in FundedbyMe’s mission to democratize investment and create a financial path to help people to pursue their dreams.  As an investor, I believe that FundedByMe’s platform and business model will be successful because it is pioneering in an area that has huge potential for growth.

 

How did you first get familiar with crowdfunding and why does it appeal to you?

When I decided to focus on becoming an Angel Investor, about two years ago, I began researching to learn about the options available to find early stage companies in need of smart money.  This was coincidentally the time that Kickstarter started making noises in the US and then of course, the US Jobs Act came into focus.  As I mentioned earlier, I believe in the democratization impact of crowdfunding both for investors and the businesses or projects that can now find funding that would otherwise never get the opportunity to come to market.

 

Which project(s) on FundedByMe did you invest in? What made you want to get involved?

So far I have only invested in FundedByMe on FundedByMe, because it was easy for me to understand the technology platform, the market opportunity and business model.  I am currently considering at least two more investments in areas that I am not as familiar – retail fashion and design.

 

What do you expect to get out of your investments on the long run?

Like all investors I expect, or certainly hope, to get a positive return.  Obviously, investing in an early stage company is always risky.  Any goal for an equity investment other than a positive return is secondary because if the business cannot sustain itself, it will simply die.  That said, the secondary goals can be very important from societal value perspective and have significant impact in the decision to invest.  I believe this is why Kickstarter and traditional crowdfunding have so far been unusually successful.

 

What is the most important tip you’d give other investors considering crowdfunding?

For equity crowdfunding, even though the amounts can be relatively small, I would suggest people invest when they understand how the business will make money and develop sufficient knowledge about the sector so that they understand the risks that the company has to overcome to be successful. Then they should assess the people involved and decide whether they think those people can execute the plan they have laid out.

 

In other words, don’t just blindly follow the crowd.

Entrepreneur tips: An awesome crowdfunding pitch video

The secret sauce to a successful crowdfunding round on FundedByMe contains a number of ingredients but it’s no secret that:

A great crowdfunding pitch presentation = A great crowdfunding round

In order to help you succeed and create a super pitch presentation that will show your company’s best side and get investors lining up to support you we will highlight a number of tips to help you put together a great crowdfunding pitch over the coming weeks.  Your presentation is the first introduction for future investors into your business – so make it count!

Today we look at your introduction video – here are some of our favourites on FundedByMe right now:

HolyManta Internal ND Lense Adapters

Nerdy by Nerds

 

What makes a good presentation video for crowdfunding on FundedByMe?

1) Introduce yourself and your team Investors are supporting your brand, that’s true, but they’re mostly buying into you as the team behind the idea. By being straightforward and honest you can create trust – which is vital for a successful crowdfunding round. If there are more members to your team than just you, introduce them. Tell the viewer what makes you and your team the ideal candidates for this ‘job’.

2) Tell a story How did you come up with this idea? What are your passions? Is this a solution to a problem you always had?

3) Talk about the money How are you going to use the money that gets raised in this round? (And no…the investor doesn’t want to buy you the latest handbag / shoes / apartment!). Show that you have a strategy.

4) Why crowdfunding? What is it that you hope to get from the crowd?

5) What’s in it for me? As an investor I want to know what I’m getting in return for giving you my money. Is it equity? How much equity are you offering? Is it the chance to be part of the latest cool innovation? Tell your audience what they’re getting in return for their support.

6) KISS – Keep It Simple (Stupid) Don’t get too technical in your introduction video. If an investor wants to know more details they can always contact you directly to ask for it. You want to appeal to a wide audience and in order to do so, you should keep it simple.

7) Look good You are the star of the show and you should look it! Wash your hair. Brush your teeth…and smile! Because then you truly are irresistible.

8) Show us your stuff If you have a prototype or a sample product, show it off. Introduce computer animated rendering if you don’t. Use your video to clearly share with viewers what your product / brand / idea is all about.

9) Respect copyrights Don’t use music that you are not licensed to use. The same goes for photography. Check with the creators that it’s okay for you to include their work in your video.

10) Go professional if you can At FundedByMe we support you doing everything on a tight budget – we’ve been there too! Creating a beautiful video doesn’t need to cost you an arm and a leg. But it needs to look good. Ask a friend or a design student to help you create an awesome video if you can’t do it yourself. And if you can afford a professional one, go for it. In the end, your video could make or break your campaign.

 

Do you have any additional tips for creating an amazing crowdfunding video? Are you an entrepreneur with strong opinions about what a great introduction video should contain? Why not leave us a comment below?

View other presentation tips here.

FundedByMe Equity video – a simple explanation

In November 2012 we launched FundedByMe Equity to supplement the booming traditional crowdfunding site that was the original concept for FundedByMe. We spotted a huge potential to offer crowd investors the chance to own a piece of equity in the brands they love and support and thus FundedByMe Equity was born. (See our great FundedByMe Equity video below!)

In the five months since then we have closed five successful equity rounds for some of the most exciting brands around and our investor crowd has invested a total of SEK17 million / over Euro 2 million. And there is no sign of slowing down…we have many exciting new rounds just waiting to launch.

In case you missed it, here are some of the latest FundedByMe Equity rounds we’ve closed since November:

Virtuous Vodka

A Private Story

Nordic Design Collective

FundedByMe (yes, it was FundedByMe ON FundedByMe!)

Elinnovation AB

FundedByMe Equity video

Watch this easy introduction video to FundedByMe Equity – and share it with everyone who needs to be part of the next big thing!

Are you looking for equity crowdfunding for your business? Why not approach us to help you find the right investors?

Investor Interview: Sebastian, a new FundedByMe investor

Meet Sebastian, one of the newest FundedByMe crowdfunding investors. Tell us about yourself!
I am an 31 year old jack of all trades, academically my background is in economy and management with studies on bachelor, master and MBA level at Umeå University, Sweden, Universidade Nova, Portugal and Harvard initiated INCAE in Costa Rica. Work-wise I have done just about everything from commercial long line fishing, correctional officers work, financial investment and a range of consultancy positions regarding economics and management. The entrepreneurial perspective has always been a big part of my life with several of my own ventures and companies throughout the years. Currently I am the CEO and funder of NaturalGoods.se, the company that launched the revolutionary product SoyMaster, a beautifully clever little machine that allows you to make soy-, wheat-, almond-milk and many other types drinks at home in just a matter of minutes.

 

How did you get familiar with equity crowdfunding, and why does it appeal to you?
As I have a strong interest in microfinance the logic behind crowd funding was something that very early seemed logic and scaleable to me and I have familiarized myself with the concept through various organisations take on it such as Kiva, Kickstarter and others. My eyes have been on FundedByMe since the very beginning since I love the concept and I really saw potential in the team behind the company. Being able to meet Daniel Daboczy for a chat in connection to a lecture in 2011 only spurred my interest further. Crowd funding appeals to me in many ways both through the recognition and confirmation that comes out of many people showing that they believe in you and your idea directly with their hard earned money which is so much stronger than just kind words, but also as as crowd funding often functions as a platform for the entrepreneur to reach both potential clients and future partners, advisors or suppliers in the process.

 

Have you ever done a crowd equity investment? And if so, in which company?
No, my first investment is in FundedByMe as the round closes shortly.

 

Why did you invest in FundedByMe?
Because I love the idea, have strong belief in the team behind and see a prosperous outcome in the long run with the investment, in traditional financial terms but also, and maybe more importantly, through being able to be a part of the creation of something great. Being involved in the buildup, if only by investing a small sum, of a great company is a reward in itself, a story to tell and to be proud of and in this case the company will enable others ideas to bloom as well, which is a huge bonus!

FundedByMe re-launches Equity Crowdfunding

FundedByMe Equity

Just a few days ago, after weeks of coding and testing, we re-launched our site. The most obvious difference is our shifted focus towards Equity Crowdfunding, catering to future startups with a very powerful tool to manage campaigns, shareholders and legal matters.

Crowdfunding has been around for a while, centuries actually, but will only in 2013 really take-off into super overdrive. It is probably one of the business models which makes the most sense, where some people might have plenty of money left to spend on small investments others are full of great ideas and in desperate need of funding. Puzzling is much easier with a lot of small pieces.

Where we live in a society which is rapidly moving away from the traditional corporate structures and in which we more and more started embracing small and young initiatives many entrepreneurs have a hard time landing a serious round of funding as there are simply not enough traditional investors to fill the need! This however should not be a reason for stopping this movement away from the traditional corporation, and that’s why equity crowdfunding is an essential part in this revolution.

There are other reasons to turn to equity crowdfunding as well. Being a young and small company it is often hard to own all knowledge needed to start and grow your company, many different small investors however allow you to take on a wide range of talent in all fields where you are missing out initially.

We have run a first campaign with Virtuous Vodka, a brand who has chosen to use FundedByMe for two main reasons:

1) Get market validation and turn every small investor into a brand ambassador
2) to source all the knowledge which all investors own together, ranging from online marketing to development.