Lauren Pears is a bright twenty-something London entrepreneur who raised £109,510 in 56 days. I recently interviewed Lauren about her experience.

It seems that the traditional approach to funding a new ‘bricks and mortar’ business is all but impossible. Costs are getting higher everyday and interest rates are low but there is no money.  Banks have never been in the business of ‘risk’ loans but it seems that even traditional financing ratios don’t interest banks anymore.

If we don’t have a rich uncle or parent somewhere then what do we do?

In the New York Harlem of 1920’s, 30’s and 40’s when someone was short on rent they would throw a party and would invite friends, family and neighbours for food, drink and great entertainment. Guests would donate at the door until the back rent was covered.  These parties did more than pay rent they provided important opportunities for emerging Jazz musicians to practice their craft and develop a following. This time was The Harlem Renaissance. Crowdfunding is the providing the exact same role for new cash hungry businesses and providing the seed money for a new renaissance.  Initially it was – businesses but the concept is spreading to traditional businesses.

Lauren Pears is a bright twenty-something London entrepreneur who raised £109,510 in 56 days. I recently interviewed Lauren about her experience.

Here and my interview with Lauren is below: Wyn: Why did you decided to fund your business using crowd funding?

Lauren: I was limited to 4 funding options to stay in the country and see through the business: Government funds, venture capital funds, seed funding or private funds. Government funding was inappropriate for the business, venture capital and seedfunding people only seemed interested in technology, and that left private funds. This meant angel investment or crowdfunding, and crowdfunding was the most appealing prospect because there was no need to sell equity. Ultimately, we did secure an angel investor as well, who is investing in the growth of the brand.

Wyn: How did the crowd funding results compare to your expectations?

Lauren: Better than I expected, but as good as I hoped 🙂

Wyn: What did you learn about crowd funding a business as a result of actually going through the process?

Lauren: It’s a lot harder work than most people think, and the crowd’s expectations of how you engage with them, as a business is very different. I feel that, as a crowdfunding business, people want a say in how it grows and they want a piece of you and your story.

People don’t invest in ideas, they invest in people and I think that’s equally true for crowdfunding as it is for traditional investment.

Also, I’d caution any potential campaigner who wants to open a venue using crowdfunding to keep their mind on cash flow. A lot of the money you get can’t be spent before you open: during your opening months you can expect a greatly reduced income as everyone claims their perks and brings limited cash into the business.

Wyn: Do you think that crowd funding could be used for any kind of business?

Lauren: It depends on the type of business, how much you want and the scale of the campaign you’re talking about. If someone wants to start something little and uses their personal social network to raise a few grand, then I think yes, you could do anything.

On a bigger scale, where you’re trying to draw in strangers, your business needs to fulfill a widespread perceived need in people who don’t care about you of your dreams. Luckily for me, people (including me!) feel they need animals in their lives. I’ve seen other specialty venues struggle with their campaigns: Novelty will only get one so far. There has to be a real imperative from the funder’s side that they really want or need what you’re offering.

Wyn: What resources did you use in preparing for crowd funding that were most useful?

Lauren: The press, hootsuite, and daily standup meetings with my very clever friends. Every morning, on our informal coffee break, we’d assess the health of the campaign and think of new things to do. It wasn’t really a process we put in on purpose; it was just something we did because we were all engaged and obsessed with the campaign! It was by far the best thing we did. Every day, eyes on the campaign, how do we improve, who do we reach today that we haven’t reached yet?

Also: don’t ignore the naysayers. I filtered social media networks and set up news alerts for references to cat cafes (and still do, to see when/if competition pops up) and anytime someone expressed concern about hygiene or welfare, I would contact them to allay their fears. This personal and direct approach to convert people to my campaign was a question of real money. 30 seconds to tweet someone and demonstrate I shared their concerns could mean an extra £50 that day.

Wyn: Do you feel there are any negatives to using crowd fund?

Lauren: There are a lot of copycats popping up: you put your idea out there and they’ll think it’s a good idea too.

Also, everyone is watching you. Opening a venue is hard work, slow, and challenging. For me, as the first venue I’ve opened, it’s all in the public eye, the crowdfunders deserve updates, and it’s very stressful. Every mistake is in the public eye.

There’s also an engagement overhead: I have to be on Facebook/twitter/g+ as often as possible. It can get in the way of productive work, but you can’t leave your campaign supporters high and dry while you disappear into an office for months.

Wyn: What difference has your crowd funding success made to the launch of your new business?

Lauren: Aside from the obvious benefit of being funded, there are other ways in which crowdfunding makes a phenomenal difference. I changed my business plan many times over during crowdfunding in response to campaign feedback and ideas.

Crowdfunders are already engaged with your business and want you to succeed, and I’ve experienced such an outpouring of kindness and support and offers of help, it really blows my mind (although after years of being very active in online forums and networks, I also think I have an exceptionally wonderful group of online followers).

For Lady Dinahs Cat Emporium, it gave us an immense response from the press as well, which was serendipitous, really. We thought we’d get some coverage, but we got more than we ever dreamed, it was a real blessing.

Crowdfunding has made the business possible and better.

Wyn: Banks are hesitant to lend to start-ups do you feel crowd funding is a real option for start-ups?

Lauren: Absolutely, but prepare for a lot of hard work.

Wyn: If you had to give just three tips to a new or existing business wanting to fund a business with crowd funding what would you recommend?

Lauren: Don’t try to hold a full-time job at the same time. I got very ill during my campaign because I was working full-time and running the campaign. It’s too much strain and you need to save your energy for afterwards: the end of the campaign is by no means the end of the work.

Get a proper video done and make sure you are in it. People are investing in you, not merely in your idea. They might like an idea, but they want to know the person who will deliver it. They want to judge you and decide if you’re up to the task, and fair enough, really.

Only go to the crowd with a business that you fully understand, can fully explain and can fully defend, if you need to. Crowdfunding does not exempt you from having a full business plan and people will ask a lot of questions.

Wyn: Are you available to consult businesses on crowd funding and do you speak at business events about your crowd funding success?

Lauren: Not yet. Once the cat cafe is open and stable, I should have more availability, though.

Wyn: Thank you Lauren!  Great to learn of your story and your experience as it holds importance lessons for any entrepreneur even considering a new business venture. I am deeply impressed!

I encourage readers to follow Lauren and her cats on Twitter, FacebookLinkedIn and of course the Lady Dinah’s website!


 

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Wyn Nathan Davis

Wyn Nathan Davis MBA DTM is a London based sales recruiter, sales trainer and sales process consultant. A best selling author and professional speaker. Wyn is Managing Director of The sales Experts. Contact us for more details connect@thesalesexperts.com +44 (0)20 536 5591