Although I have written about Crowdfunding on a number of occasions, the last was in July 2013. In many of the fundamentals little has changed since then, although there are now a handful of equity crowdfunded companies in Scotland.
One thing that has changed for me is that I’ve now been part of a team that completed a successful crowdfunding campaign! This wasn’t really a part of my professional life – more of a labour of love…
When blipfoto collapsed in 2015 I blogged about the Fragility of Startups. The company may have collapsed but the site lived on with new owners, and late last year I had the opportunity to be part of a volunteer team to do a community buyout of blipfoto assets and run it on a sustainable basis. The headlines are great – over 1,400 people invested over £130,000 to save the site.
In many ways the deal broke all the conventions. We used equity investment as a tool for community ownership, but financial return was not the goal of most investors. We built a Community Interest Company (CIC) which has extra regulatory requirements, and so far as we can establish we are the first equity crowdfunded CIC in the UK. We launched our campaign with only a tiny fraction of the required investment pre-agreed (just small contributions from the four directors). We used the white-label offer from ShareIn as a platform and to help us comply with FCA regulations, and publicised the campaign only to a closed community. In other words, it was almost the exact opposite of how I expected I might use crowdfunding when I wrote back in 2013!
We learned a lot from the experience too. With a global audience, we learned we had to accept donations as well as offer equity (which was only practical EU). We learned just how hard it is to get debit card transactions approved for crowdfunding, and just how many people don’t have a debit card. We learned the company secretarial software our lawyers use can’t cope with the number of shareholders we now have. We learned that it is surprisingly difficult to reconcile 1,600 transactions across two payment providers with different fee structures and data feeds with all the costs that are automatically deducted.
The most important lesson was that when people are behind something, they can be absolutely and completely awesome – and that when after weeks of anxious watching that progress bar clicks over a magic limit, it feels great!
I still anticipate using crowdfunding professionally one day – but I’m sure I’ll never do another crowdfunding quite like this!