Crowdfunding isn’t a particularly new or innovative way of raising investment anymore. Hundreds of companies and products have hedged their bets on platforms like Kickstarter, IndieGoGo and Crowdcube in the last few years - some succeeding beyond their wildest dreams, others falling into obscurity and failing to fund.
Here at Tutora, we’d like to think of ourselves as fairly experienced in the crowdfunding world. Over the past 12 months we’ve successfully completed two crowdfunding investment rounds: £150k in April 2016 and a further £700k in March 2017.
Throughout these two pitches, we forced ourselves to quickly become experts in crowdfunding jargon, strategies and growth hacks. Now that our second round has finished, we figured we’d share a few of the lessons learnt to help you succeed at crowdfunding too.
1. Crowdfunding isn’t easy, no matter how well you prepare for it
Running a crowdfunding investment campaign (and I’m sure any form of investment drive) is one of the most difficult times for any business owner. Not only are you required to continue managing the day to day running of your business, staff and financial accounts - but you must also summon the energy to do everything within your power to keep the investment flowing in.
2. Teach yourself early on how to manage stress
On top of the above, you need to be prepared and capable of managing the stress you’ll experience throughout your campaign. Somedays you’ll be doing amazingly well, then suddenly the campaign will stall for days on end, investors will change their minds or pick holes in your business plan and valuation. It’s OK to forgive yourself the occasional curse under the circumstances, but you can prepare yourself better by learning mindfulness and stress management techniques as part of your campaign prep.
3. Be honest about your reasons for crowdfunding
Until recently, the average person would be rather wary of a business asking them for money to continue spending on growth. Thankfully, the openness of the crowdfunding community has demonstrated the value of raising investment funds in this way. At Tutora, we decided to be open about our decision to pursue crowdfunding to raise money for the business. We wanted to support our community by retaining as much of the business as possible, meaning we could make decisions autonomously to respond to their needs, requests and wishes.
4. Speaking of community, make sure to let them know how much you value them
During our campaigns, we constantly reminded our community of tutors and students how much we value them and their continued support. We strive to create the best experience for them and to continue to achieve our mission. We even invited our community of students and tutors to invest in the company themselves. Bringing them into the fold as part owners of the company helped to show how much we appreciate them, rather than simply being regarded as a number in a database.
5. Crowdfunding can actually introduce you to even more investors
We learnt early on that, despite pursuing crowdfunding due to a lack of extensive VC and angel networks, a well done campaign can actually introduce you to many new investors and business advisors. These high-worth individuals regularly peruse crowdfunding sites in the hopes of spotting their next big investment. By positioning yourself well, many will reach out to learn more about the business and how they can support you as a founder beyond the investment.
These are just a few of the many things we’ve learnt from raising investment through crowdfunding. It can be an incredibly rewarding process, but also incredibly difficult. Ultimately, when crowdfunding, the viability and need for your business will be the deciding factor of your success but by applying some of the core principles outline above, perhaps you too can succeed with your campaigns. I wish you the best of luck!
This Article was written by: Scott Woodley CEO and Co-Founder of Tutora - a former teacher fed up with the lack of quality tutors to recommend to parents of his students, Scott left teaching to found Tutora with his childhood friend Mark Hughes. Tutora is an online tuition marketplace that connects parents with the very best private tutors for their children. Tutors cover all academic subjects, including languages and instrumental lessons, and all age groups from 5 years old and up. The startup recently raising £750,000 to continue their explosive growth via crowdfunding on Crowdcube.com.