Fundraising through equity-based crowdsourcing

Alex Kammerling founded spirit manufacturer Kamm & Sons in 2011 and raised £180,000 through Crowdcube, a website that offers equity-based crowdsourcing as a means of raising funds.

Alex Kammerling founded spirit manufacturer Kamm & Sons in 2011 and raised £180,000 through Crowdcube, a website that offers equity-based crowdsourcing as a means of raising funds. SmallBusiness.co.uk talks to Alex Kammerling about his experience method.

Talk about your quest for finance pre Crowdcube, leading up to finding out about it.

We had been looking for finance for about ten months before we secured it. We started with people we knew and friends of friends. We also presented at the London Business School to a room full of angel investors which brought us more interest, although no deals. We must have had around ten to 15 serious meetings, but noone offered anything decent enough.

How sold were you on Crowdcube and had you researched any of its competitors?

We had never heard of equity-based crowdsourcing before although we knew and liked the Kickstarter model. When someone mentioned Crowdcube we thought it would be an ideal platform to place the brand while we were searching elsewhere and we didn’t have anything to lose by trying. We didn’t shop around, just went with Crowdcube as we liked the concept and liked the guys behind it.

How simple was it to get yourself heard about through Crowdcube – how quickly did people show an interest and start investing?

We didn’t realise quite how good a ‘shop window’ Crowdcube was and it has brought us a lot of press and external investor interest. People started investing immediately, although we had to push pretty hard to break the 60 per cent (of funds achieved) barrier.

How many investors did you end up with?

We now have 85 investors and are planning on designing a separate investor forum on the website which will have updates and financial data that can be downloaded. We still don’t know quite how easy/hard this element will be yet.

Talk about the equity stake you gave away. Was it more than you originally planned? How does it compare to an angel investor’s demands?

We gave away 23 per cent which was exactly what we intended to give away for the money we had calculated the business was worth. There were no negotiations and no quibbling so it really worked well in our favour.

Have you been frustrated with any aspect of the service? What do they do really well?

There are still some legal issues which need ironing out. The model is a new one so there are always going to be new issues thrown up.

Overall, what advice would you give for other businesses thinking about equity vs a more concrete loan?

That is a hard one as it depends on the relationship you have with the bank and your personal disposition to debt, but we didn’t want to take a loan from the bank as they were offering a ridiculous interest rate.

For more information, visit the Crowdcube website here.

Related Topics

Crowdfunding

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