Donncha Hughes, New Frontiers mentor and trainer, shares tips and insights about crowdfunding, including a video of a recent conversation with New Frontiers alumnus Derek O’Sullivan.
I recently met up with Derek O’Sullivan of Crua Outdoors in the Tom Crean Centre, IT Tralee, for a chat about crowdfunding. This article will highlight some of the key takeaways from the conversation. We spoke about what they have learned during their Kickstarter and Indiegogo campaigns and how they raised significant equity funding using Seedrs
Crua Outdoors: A Kerry and New Frontiers startup success story
I first met Derek O’Sullivan several years ago when delivering training on the New Frontiers programme in IT Tralee, and I have kept an eye on their progress online in the intervening period – as discussed at the end of the video interview, Crua Outdoors is a very successful business with:
- 5 employees plus partners/base in the US
- Range of 20 products, with a new hammock about to the launched
- International sales across 43 countries
- Completed several crowdfunding campaigns and have raised external equity investment using Seedrs and traditional sources to include Enterprise Ireland HPSU.
- Turnover tripled from 2016 to 2017 and on target to triple again in 2018
- Seriously looking at 7 figure investment in a production facility in Kerry
Key to this success is a brilliant product and a deep understanding of the customer which leads to great brand loyalty.
Deep crowdfunding experience
In the YouTube video, Derek acknowledges that Crua Outdoors would not be around today without crowdfunding. It provided a large part of the finance for the first and subsequent production runs. They are learning all the time about the crowdfunding process.
In 2015, they successfully raised €50,891 with 175 backers. According to Kickstarter’s website, they have (at the time of writing) 3,887 live projects, with 141,606 completed projects funded by a total of 14,432,333 backers.
Kickstarter is not a store. It’s a way to bring creative projects to life.
Kickstarter does not guarantee projects or investigate a creator’s ability to complete their project. It is the responsibility of the project creator to complete their project as promised, and the claims of this project are theirs alone.
Derek identified the following as the Three Big Factors to manage in a crowdfunding campaign:
- Market research
make sure you are offering something that people actually want.
- The video
needs to be professional and focus on the problem being addressed.
- Drive traffic to your site
have a plan to source and convert visitors to your campaign page.
Derek believes that crowdfunding should be utilised more by startups in Ireland – it is ideal for product companies particularly those that have a tech or innovation angle. See the New Frontiers article Financing: alternatives to business bank loans, which runs through some alternatives to bank loan finance, listing crowdfunding as one option.
InterTrade Ireland equity crowdfunding resource
It was a happy coincidence that as I was arranging the meeting with Derek, that InterTrade Ireland published a superb resource on equity crowdfunding as a downloadable PDF.
“Equity crowdfunding has established itself as a real complement and alternative to traditional equity funding sources for High Growth Potential Start-Up and Growth Stage businesses in the UK and Ireland in recent years.”
Source: Equity Crowdfunding Resource, InterTradeIreland (page 2)
The InterTrade Ireland reports presents (page 4) the following table gleaned from the Beauhurst report on 2017 UK Start-Up investment activity ‘The Deal’, reflecting the deal volume activity of the lead UK-based equity crowdfunding platforms. The lead private players in the UK are Seedrs, CrowdCube, SyndicateRoom and VentureFounders.
The resources section is very well written (only 22 pages). It provides the necessary background information on equity crowdfunding compared to reward-based crowdfunding and the usual sources of startup funding. It also provides four case studies in the form of two pages summaries with all the pertinent details across set headings to include money raised, equity offered, and campaign preparation.
Crowdfunding is not a case of ‘build it and they will come’… it’s never that simple
Derek stresses in the video that crowdfunding is not a case of ‘build it and they will come’. This point is echoed in the InterTrade Ireland resource on page 11 and by their HouseMyDog case study.
“A business launching a fundraising campaign typically cannot solely rely on the Equity Crowdfunding platform.”
Source: Equity Crowdfunding Resource, InterTradeIreland 2018
Proactive management of crowdfunding campaigns to include significant preparation in advance is required.
Watch my conversation with Derek
Please note that this was one take – and the full interview was uploaded – edited subtitles have been added to the video to complement the audio.
About the author
Donncha Hughes is a former incubation centre manager and has worked with startups for almost ten years. A big advocate of Lean Startup, his areas of expertise include: marketing, sales, business models, supports for business, business plans and financial projections. An EI mentor and member of the CSF Evaluation Panel, Donncha specialises in working with early stage startups.