During the Golden Age of Hollywood, five gigantic studios produced almost every major motion picture. Producers, actors, directors, cast and crew – even screenwriters – were all contracted employees of single studios and were assigned to many projects a year by the big execs. Most films earned respectable returns, and the runaway hits more than covered the losses of the year’s biggest flops. As long as the film industry ran, studios were in business.
After the vertically integrated system broke down, big studios downsized and esssentially became backer-distributors rather than production companies. They would hire production companies or freelance creatives to work on their projects. With less control over the production process and monetising at fewer stages, studios took fewer and fewer risks, ultimately leading to the highly formulaic, reliable, massive-scale tentpole productions we see from the big studios today.
This opened the doors for independent cinema to fill an artistic void in the film industry. However, this meant people were specialising in essentially unreliable and largely unprofitable films. Small-scale film financing largely became a gifting economy, forcing the best creators into a network of boozing, schmoozing, nepotism, connections and wealth. Any original talent without access to this network will have a hard time indeed of getting their film made.
So where does that leave a prospective filmmaker today? Crowdfunding, when it emerged ten years ago, presented a radical new alternative to outdated industry standards for funding. Even some big names like Charlie Kaufman ($406K) and Spike Lee ($1.4M) turned to crowdfunding to realise their passion projects. However, crowdfunding ultimately depends on fandom and altruism, and could never become a fully sustainable model for film funding.
Here at LiveTree, we are revolutionising the way films are funded. Because we are using blockchain technology, small financial transactions can be made throughout the world with great efficiency, meaning that royalty contracts remain profitable for financiers on tiny scales. If the LiveTree community notice a pitch that they love, want to see more from a new director or need to see a sequel to a sparkling indie flick, they can pool together and fund the project with Seed tokens, the world’s first film and television cryptocurrency.
The blockchain enters each backer into contracts of rights and royalties with creators which cannot be altered or dishonoured. This is of great contrast to the purposefully opaque and notoriously unreliable royalty agreements made through studios. Audiences can fund the content that is meaningful to them, and then earn their share of the profits. Meanwhile, creators can be assured of a scaleable fanbase for their content. Fewer middlemen and fat cats leads to a fairer, more reliable, more equitable deal for creators, as well as much greater creative control.
The alpha version of LiveTree’s own streaming channel, Blossom TV, launches 5th November, so why not register now, stay up to date and discover the future of entertainment.
Crowdfunding is a risk free way for creatives, communities and entrepreneurs looking to fund their project. A well run crowdfunding campaign can take an idea and turn it into a reality, yet crowdfunding may seem easy but there are some considerations to take on-board before starting. When a crowdfunding campaign fails, many business owners or project creators often wonder what went wrong. This blog takes you through some of the common pitfalls.
So why doesn’t crowdfunding work? Or, for better words, when crowdfunding doesn’t work, what happened? Below are some of the reasons crowdfunding doesn’t work and how LiveTree’s improved version of the typical crowdfunding platform can work for your business. LiveTree offers the best crowdfunding solutions for your project and can create successful crowdfunding campaigns for any project.
Define your crowd
The reason crowdfunding often doesn’t work is often due to weak marketing strategies (which can kill your crowdfunding project) and failure to define their crowd in order to get the right funding, recognition and opportunities. You need to consider who would be interested in your project and, more importantly, who would be willing to financially invest in your project. Defining your target crowd/audience defines who would be willing to back you financially or be interested in promoting your story. Consider the themes driving your project: Are there online forums, groups, location suppliers, or businesses relevant to your film? Could you reach out to those people? Are there bloggers or journalists that would be interested in telling your story?
While developing your career it’s important to have a good slate and a crowd that supports you. When you have a crowd, it makes it much easier for us to market you to raise more funding and introduce you to relevant partners like BFI.NETWORKS, Film London, RedRock Entertainment or any of our relevant partners. LiveTree is here to get you funded and develop your career.
What the industry needs
The industry needs a different kind of crowdfunding platform which focuses on the success of their campaign creators and can provide them with the kind of features they won’t find anywhere else. With many crowdfunding platforms, project creators are offered a crowdfunding platform and little else. Project creators need resources they can use to help build their businesses and grow their crowdfunding efforts. Features including videographers and legal advice, as well as other tools project creators need should be included in a convenient online directory.
Business owners know that it is good business to align themselves with non-profits and other charities. With existing crowdfunding platforms, there isn’t a non-profit element and that is something that can often add value to a crowdfunding project. Project creators need all of these features and more if they are going to succeed.
This is where LiveTree comes in. LiveTree understands that the non-profit/charitable organization element can help influence others to help promote a crowdfunding project, making it that much more successful and effective. LiveTree also offers a wide range of useful tools and resources that can help give projects the momentum they need to succeed.
Another advantage that LiveTree has over any other crowdfunding platforms is a sense of community. LiveTree has built their online community by focusing on both sides of the crowdfunding project and offering backers a financial incentive for promoting crowdfunded projects. LiveTree offers no hassle crowdfunding that will ensure your project’s success.
Why Should You Choose LiveTree?
If you are serious about growing or expanding your business, making your startup succeed and creating a successful and effective crowdfunding project, choosing LiveTree is an important start. LiveTree goes beyond being just a transactional marketplace and focuses on the success of project creators and offers the best crowdfunding solutions in the industry. This ensures that business owners can get the financing they need for their projects while helping others succeed in their crowdfunding projects as well.
Contact LiveTree Now to Get Started
The next time you are considering a crowdfunding project for your business startup or expansion, choose LiveTree and avoid the above reasons many crowdfunding campaigns fail. Contact a LiveTree professional now and let us create a successful crowdfunding campaign for you today!
When it comes to crowdfunding platform, it is very important that you understand that not all platforms are the same. With so many options to have to choose from such as Crowdfunder, GoFundMe, IndieGoGo, Kickstarter etc. it’s understandable if you are confused about all the options out there. Here is a quick handy comparison guide to help you choose the right one for your next project.
When it comes to getting your name out there, you might be better off going straight to Facebook (it’s free) than choosing crowdfunding platforms. As they rely entirely on your existing network in the hopes that they will spread the word for you. Although this is a good place to start it is a market that soon falls flat, which is why most of these platforms have a less than 30% rate of projects, which achieve their goals successfully. They do nothing to help you build or grow your network; you are more or less left to your own devices, sink or swim.
Kickstarter won’t give you a single cent if you don’t reach your goal, while LiveTree will. Kickstarter does, however, like LiveTree, offer a reward of appreciation to the contributors when a goal is reached. Crowdfunder and IndieGoGo offer little benefits in this regard when compared to incentivisation of the entire global LiveTree community to participate in your project. LiveTree’s fees are lower in comparison that opting to donate to charity won’t even put a dent in your budget, while the exposure and goodwill that comes from it are priceless.
Expert Support with Bonus Exposure
Unlike all the other platforms, LiveTree offers one on one support from day one through to completion of your project and beyond.When making one final comparison, the bottom line, it is clear what makes the most sense when it comes to selecting the right platform to crowdsource funds for your project.
LiveTree doesn’t have an all or nothing rule; as they recognise that projects evolve and adapt and how important it is to have flexibility. Backers of projects are given the opportunity to refund their pledge before the funding deadline and if a backer makes a pledge within two weeks of the funding deadline they will always have a minimum 2 week “cooling off” period. After those two weeks, the funds are then made available to the creator of the project at the end of the project.
Unlike these platforms, LiveTree has revolutionised the crowdfunding scene by introducing a concept called Branching. This gives people the opportunity to share your project on various social platforms, incentivising them with a commission if their share leads to a donation. LiveTree has connections with various charities; by donating a percentage of your earnings to these charities you are further exposed to their followers and an even greater audience, who will appreciate your goodwill. A portion of the commission that the Branchers earn can even be donated if they so wish. You do not get exposure like this from other platforms; in fact, GoFundMe clearly has a different model entirely; on their website that you should not expect to be assisted by strangers at all – they recommend contacting the media if you hope to gain outside assistance. Branching tools promote the growth of your network, which will grow to include other bloggers, as well as the greater creative community. For this reason, LiveTree is a firm favourite.
Your aim when launching a project in this manner is to use the best platform to get the most out what you have to work with. When comparing what you’re getting between GoFundMe and LiveTree, the winner is clear. At first, GoFundMe seems to be very user-friendly, much more so than Kickstarter; like LiveTree, GoFundMe will allow you to withdraw at any point and you can keep everything whether you reach your goal or not.
But is that enough really? Are they really making it worth your while, since they’re giving you cash from your own friends, and keeping a big section for themselves? Let the showdown begin. With GoFundMe, can you;
Reach a Wider Audience?
With GoFundMe, you rely on the people in your life you could easily just approach in person. Then, if they really like you, they ask their friends to support you. I know what you’re thinking; why paying 8% of my earning to GoFundMe in that case? If not, then you should be.
Reward and Incentivise Your Network to Expand Your Exposure?
GoFundMe do not connect you with potential donors, nor do they expose your project in any manner other than to use the network you already have. They having nothing resembling LiveTree’s Branching concept, which encourages other LiveTree users and social media users to spread their story and promises them commission for doing so. It’s a win-win situation in which everyone is helping everyone out, yet we don’t charge the exorbitant processing fees that GoFundMe do.
Make the World a Better Place?
Following our vision firmly rooted in bringing the community together, following the theme of everyone helping out, LiveTree associate ourselves with various charities and offer you the chance to donate portions of your earnings to these worthy causes. Not only does this help extend your network it helps you give back to the community which you are asking to help you. Branchers who help you spread the word are also further encouraged to get involved, knowing that while everyone is earning commission, they are also doing something good for the world. Charities LiveTree have aligned with include Doctors of the World, Hope for Children and Youth Music.
Get Continued Support, Expert Advice, and Global Exposure?
LiveTree gives that and so much more. While GoFundMe states that “Once your campaign begins to really pick up steam, our team may contact you,” the truth is that these is no personal connection to you whatsoever. LiveTree is unique in this aspect, in that we offer consistent support from your own dedicated Support Analyst from the moment your project takes off until it reaches its successful completion and beyond that – all at no extra cost to you.
Crowdfunding campaigns involving creative projects such as filmmaking have often been unsuccessful or encountered difficulties in raising their required funds. This is because creative projects are often less popular and successful when competing against various other genres of campaigns such as technology. This has in turn resulted in many filmmakers and independent filmmakers feeling hesitant or fearful of embarking on a crowdfunding journey. This is where the LiveTree crowdfunding platform steps in and is able to assist creative individuals such as filmmakers by providing a crowdfunding platform that is uniquely tailored for creative projects and enables filmmakers to reach a wide audience and creative community. These advantages are specifically provided by the LiveTree crowdfunding platform and are not usually provided on the majority of other crowdfunding websites; making the LiveTree platform ideal for filmmakers and independent filmmakers.
Unlike some other creative projects, filmmaking usually requires a lot of financial resources in order to achieve and bring to life. For this reason, filmmakers, independent filmmakers and those making indie films often face the challenge of acquiring enough money and funds in order to make their films a reality. Crowdfunding therefore is a logical and fruitful route for filmmakers to take in order to raise the necessary funds to create their films. Crowdfunding was not available in the past, and filmmakers around the world have been reaping success from this wonderful opportunity that the modern world has created. It is therefore highly recommended that filmmakers take advantage of this opportunity in order to make their dreams a reality.
LiveTree is a unique crowdfunding platform that can particularly assist creative projects such as filmmaking. LiveTree hosts a number of different types of crowdfunding campaigns but unlike most other crowdfunding websites, LiveTree is especially helpful for creative projects such as filmmaking. The LiveTree team can help creative individuals such as independent filmmakers create the best marketing strategy and they even provide on-going help and support that is very hands-on. The LiveTree team not only helps creatives start and set up their crowdfunding campaign but also provides on-going assistance every step of the way to ensure that these campaigns are seen to completion. This can help to calm the nerves of any independent filmmakers who may feel anxious or even clueless as to how to create a successful campaign. LiveTree also provides the option for a portion of all funds raised during the campaign to be given to charity, and this also helps campaigns to increase their funding.
A unique aspect of the LiveTree crowdfunding platform is the ability to connect creative people such as filmmakers into a creative community. This is an advantage that filmmakers would otherwise not have, and allows them to connect with a larger audience than they would be able to by using their own networks. These creative communities can have a major influence on filmmakers and are filled with people who are looking to promote and sponsor creative projects and independent films. LiveTree can assist in partnering and exposing filmmaking projects and ideas to the right audience of people, and this allows filmmakers to have the confidence in exposing their creative ideas. Many independent filmmakers have become hesitant to share their creative ideas on crowdfunding websites because of the fear of being criticised or because of the fear of failing and not being able to properly promote their projects. The LiveTree team has acknowledged these issues and have designed a platform that is tailored for creative projects and provides assistance especially for creatives and filmmakers. LiveTree is therefore an ideal crowdfunding platform for filmmakers.
LiveTree will not only assist filmmakers in raising the required funds to begin their projects but will also help to connect filmmakers with the right target audience and support network. They will also provide assistance so that filmmakers can create a campaign that works for them. This gives filmmakers who may feel hesitant or nervous about creating a crowdfunding campaign the confidence in order to embark on their crowdfunding journeys. Receiving assistance from professionals who have helped to create loads of campaigns and who have extensive knowledge in how to create successful campaigns can give filmmakers the confidence they need. LiveTree provides support for creative projects, especially for filmmakers. Another example of one of the ways in which LiveTree cares for and encourages independent filmmakers is through one of the competitions that is provided exclusively for filmmakers. The winner of the competition is awarded £500 as well as access to BlackMagic cameras in order to create their film. This offer is exclusive to the LiveTree platform and is just one of the wonderful ways in which LiveTree supports filmmakers and independent filmmakers.
Since LiveTree is directed toward creative projects; the platform also attracts many people from all around the world who are specifically interested in viewing and sponsoring creative projects. Filmmakers are therefore able to attract more funding and support by utilising a platform, which places a major focus on creative individuals and filmmakers.
If you are ready to get started with creating your own crowdfunding campaign in order to create the film of your dreams, simply click on the link below in order to create your campaign with LiveTree; the best crowdfunding platform for filmmakers and independent filmmakers.
How many times have you gone to see a big budget film only to leave disappointed? Maybe the characters weren’t up to snuff, or the storyline itself left a lot to be desired. Whatever the reason, you are still scratching your head wondering how they could have spent so much money on a movie that was merely lackluster. This makes what we are about to share with you even more incredible. We have found a selection of independent films that were very successful without the financial backing of a large production company. These films were all crowdfunded and they are all a must see for anyone looking to be entertained. Crowdfunding for filmmakers is just another facet of the crowdfunding industry and one that enables independent filmmakers the opportunity to get their project funded and get their film in front of millions of fans. Let’s take a look at some of the industry’s most successful crowdfunded films:
The Veronica Mars Movie Project
The Veronica Mars Movie Project was created by the original cast and crew of the television series. Raising $5,702,153 from 91,585 donors made this film one of the most funded crowdfunding projects of all time.
Gosnell, a film following the now infamous doctor, Kermit Gosnell, as he became one of America’s most prolific serial killers, raised $2,241,043 through its crowdfunding efforts.
Blue Mountain State: The Movie
Based on the successful television series about three incoming freshmen attending a Midwestern college football powerhouse, Blue Mountain State: The Movie was a successful crowdfunding effort showing what fans of a television series can do. This crowdfunded film raised $1,911,827 from 23,999 contributors.
God Help the Girl
Set in Glasgow, God Help the Girl is a musical/coming of age film that was written and directed by Stuart Murdoch (lead singer and songwriter in Belle & Sebastian). Although its crowdfunding goal wasn’t as lofty as the other films in our list, they did reach their goal and create a successful film with some top industry names including Barry Mendel, the man behind the likes of Munich, Rushmore, The Sixth Sense who produced it, and Game of Thrones’ Hannah Murray who plays one of the lead roles.
When the creators of Red vs Blue, Achievement Hunter, The RT Podcast and RWBY wanted to fund a new project, they turned to one of the most successful and innovative ways to do it, crowdfunding! Their latest project, Lazer Team, was about the search for extraterrestrial intelligence and offers the idea that we are not alone and that the galaxy is a dangerous place. This sci-fi comedy raised $2,480,099 thanks to just 2,188 backers.
The Newest Hottest Spike Lee Joint
The Newest Hottest Spike Lee Joint is an exercise in how effective crowdfunding can be. Spike Lee was able to raise almost $1.5 million dollars from just over 6,400 supporters. We have all heard of crowdfunding success stories and this is one of the most talked about in the entertainment industry.
When asked why he chose crowdfunding for this project, Mr. Lee wrote, “I’m an Indie Filmmaker and I will always be an Indie Filmmaker. Indie Filmmakers are always in search of financing because their work, their vision sometimes does not coincide with Studio Pictures. But I do put my own money in my films.”
Under the Dog
Although Under the Dog might not have been as popular as the other titles in our list, we wanted to add this one to show that even a small independent filmmaker can achieve their crowdfunding goal. Many of the other titles in our list are attached to big name celebrities, but Under the Dog was created by a veteran anime director and a community of supporters. This is what crowdfunding is all about and this successful campaign raised $878,028!
Start a Project to Crowdfund Your Next Film Project with LiveTree
Are you considering promoting your next film project to a production company for financial sponsorship? Perhaps crowdfunding for filmmakers is right for you but you don’t know how to get started. If so, LiveTree is the number one crowdfunding platform where artists, filmmakers and anyone looking to finance their next film or other project go for a successful crowdfunding campaign. Contact LiveTree now and let our team of crowdfunding professionals make your dream a reality and get your film seen by people around the world.
Kickstarter is the largest platform for crowdfunding a new business or creative project. Alongside it, the relatively new LiveTree is a just a sapling. But it’s growing.
When considering your options, there are two big questions you need to answer: Who are you funding for? And who are you funding from?
Who are you funding for?
Sounds pretty obvious: what is the project and how will the money be used? This will become the central framework to any good campaign, establishing why you need the money, and why anyone should hand it over.
To an extent you’re also funding for, well, the crowdfunder. Upwards of 8% of the money you raise through a Kickstarter campaign will go in fees.
But have they persuaded you why you should hand over your money?
Let’s have a look at what you get for that fee. The Kickstarter model relies on the creator’s own social media network to form the initial donor base. Kickstarter is a way to organize and activate your tribe, it does nothing to create or build it.
It’s not all about the money
Kickstarter follows an all-or-nothing set up, so you only get charged a fee if you reach your target, as do your donors. The idea is that it takes away the fear of giving money to a project that will be a dud, because it guarantees social proof, which is what we all experience before watching a new series on Netflix: if I’m going to sacrifice another twenty hours of my life mindlessly absorbed in another program, it needs at least three unprompted shoutouts on Facebook before I do.
If we’ve learned anything from recent global events, it’s that social (media) proof can’t guarantee we a good idea will get approval. In a great blog, Dale Pearson describes how ‘group-think and insularity have been hard-coded into our everyday lives via a vast online echo chamber’.
Social proof is no longer enough, and without it your project might sink. In fact as of August 2016, the success rate of fully funding a project on Kickstarter was just 35.85 percent.
Dale is right that this generation needs to be not just the ‘online generation’ but also the ‘networking generation’. But don’t worry, you wont have to engage your racist uncle in debate to break out of this echo chamber – LiveTree will help build a network of creatives (that you don’t have to see every Christmas).
Who are you funding from?
Like Kickstarter, LiveTree uses a rewards system, where a successful campaign will send thanks and goodies to its contributors. Unlike its rival, however, LiveTree also offers supporters the opportunity to become ‘branches’, and receive commission every time they promote further fundraising. Branches can support other projects and gain access to a network which extends into creative communities and beyond.
This means anyone in the LiveTree network could end up supporting and promoting your idea.
Crowdfunding has taken off partly as a result of the difficulty in accessing individuals and organisations who traditionally support such projects. What if, as well as developing an online community, you were able to open up opportunities with industry funding bodies and professionals? LiveTree does more than just provide a platform, they work with creators to support development before, during, and after their campaigns.
After the campaign, LiveTree helps creators to move beyond funding, and connects them with respected suppliers. If you don’t reach your target, you have the chance to make your case directly to your donors.
When an organisation is motivated by building communities and developing creative projects, it is in their interests to nurture them from the start. Projects need more than just capital to get started. It will ensure those projects are ready to fly before being launched, and will provide a network of branches to call home.
LiveTree has partnered with the British Film Institute to support emerging British film talent. To launch this partnership, LiveTree and the British Film Institute (BFI) developed the Future Film Raw Short campaign to support emerging film talent across the UK.
Future Film Raw Short competition
The Future Film Raw Short competition allows aspiring filmmakers to crowdfund and promote their film project. A filmmaker enters their film proposal by setting up a crowdfund and promotion campaign on the LiveTree platform. This starts the crowdfunding and promotion process for their film project.
LiveTree and the BFI then pick a selection of winning projects who will be awarded an additional £500 funding –on top of their film’s crowdfunding results– and access to BlackMagic cameras to shoot their film project. The winners will be announced at the 10th BFI Future Film Festival, 15-19 February 2017. The festival is the UK’s most important industry film festival for young filmmakers aged 16-25.
LiveTree is a socially conscious crowdfunding platform focused on supporting creative projects. Uniquely, LiveTree doesn’t just fund projects, it connects creative communities. Bloggers, influencers, suppliers, brands and charities share the success of the project. They earn branch commission when they promote a project, meaning all the marketing isn’t down to a project creator. More importantly, the community will continually support creators throughout their journey.
The British Film Institute
The British Film Institute (BFI) was founded in 1933 as a charity governed by a Royal Charter. It combines cultural, creative and industrial roles, brings together the BFI National Archive and BFI Reuben Library, film distribution, exhibition and education at BFI Southbank and BFI IMAX, publishing and festivals.
The BFI awards Lottery funding to film production, distribution, education, audience development and market intelligence and research.
BFI Film Forever
The Future Film Raw Short campaign is part of the BFI’s ‘Film Forever’ five-year strategic plan for 2012-2017 to support UK film. The plan covers all BFI activities and is based around three priorities – education and audiences, support for the UK film industry and unlocking film heritage.
Rosamund Urwin unpicks the start-up rules of a new generation
A reblog from Evening Standard, Monday 18th April. (You can read the original article here.) You can also sign up to LiveTree using this invitation link.
The rules of start-ups are changing. Gone are the days when you had to plan every detail before launch — now entrepreneurs just need to hit “go”. As LinkedIn founder and tech investor Reid Hoffman puts it: “You jump off a cliff and you assemble an airplane on the way down.” If bank managers and venture-capital firms shrug their shoulders and turn you away, crowdfund or try new lending avenues. Most of all, you need to keep changing, developing, adapting.
London is ultra-competitive for start-ups. Here’s how the strongest survive.
Planting the seed
Research, schmee-search. In such a competitive market, entrepreneurs’ primary objective is to get their product out there fast. Better to send it out into the world with the hem unfinished than to see someone else wearing your outfit while you’re still making it.
As Robert Colvile writes in his new book, The Great Acceleration: “The latest craze is for the ‘lean’ start-up — start small, create a minimum viable product and be prepared to switch tack at a moment’s notice.” Hoffman puts it thus: “If you’re not embarrassed by your first version, you waited too long to ship it.”
Alex Head, the founder of catering company Social Pantry, can relate to that: “A resource you don’t have is time. I learned from the age of 15 — selling sandwiches off the back of my bike in Riyadh [Saudi Arabia] — what to do and not to do. I’m still learning.”
If there is some time, a new approach is small-scale peer research. Been to a dinner party recently, only to discover you’re actually there for a brainstorm about your friend’s business idea? This is (low-cost) market research for 2016. Sometimes these are straightforward ideas meetings with a hand-picked focus group from peers and former colleagues; at others, the wannabe entrepreneur is on the look-out for potential partners. You’ll know when somebody starts taking notes, and you’ll get asked for feedback afterwards.
“I was invited to one recently for a mindfulness business,” a fellow journalist tells me. “The other guests were a social media expert, someone in e-commerce and a management consultant. It was a guided conversation, so my friend could work out the best way of taking forward her idea.”
Sebastian Fernando is the founder of flavourme.co.uk. Launching at the end of the month, it is a sharing economy version of Deliveroo: it allows you to order home-cooked meals from your neighbours, delivered by flavourme’s fleet of drivers. It’s inspired by the cooking of Fernando’s Sri Lankan grandmother. Fernando, 27, reckons the most important piece of research is to look at why others who have done what you’re trying to do failed: “A year later there will be a solution.”
Another idea is to bring a business that someone else is already doing in another country here: home-cooked meal delivery is popular in the Netherlands and parts of the US. Jonathan Randall, who founded photobooth firm Flashmat last October, had the idea because a friend of his wife’s was already doing something similar in France.
Old school: commission market research from a specialist firm.
The new way: find out what works as you go along; the brainstorming dinner.
Head, 30, and Randall, 32, both self-funded their businesses, and Fernando applied for seed capital. But there are new ways to get funded.
“Funding has changed enormously,” says Toby Darbyshire, who co-founded solar firm Engensa in 2009. “When we set up Engensa, it was all about institutional investors and venture-capital firms. Now, it has democratised, with the rise of peer-to-peer lenders and crowdfunding.”
Growth Street is one alternative to a bank overdraft. “Over the past three-and-a-half years, bank supply of overdrafts for small businesses has reduced dramatically,” says James Sherwin-Smith, its chief executive. “If you don’t have a bank overdraft, you either have to get more expensive finance or you have to build up cash to survive a dip or if a client pays late. That’s money you’re not reinvesting in your business — hiring another person, say.”
Growth Street is a business-to-business marketplace to solve that: “We connect companies that want to lend because they have excess cash to businesses who want to borrow.”
Haggerston-based LiveTree, which launched two months ago, is another new funding model. Ashley Turing, its 37-year-old founder, explains: “We’re a crowdfunding platform and a marketplace once the product is built.” The model is to refer friends “because we believe personal recommendation is the most powerful way to get your product out there”. But while Google and Facebook collect users’ data, LiveTree returns the profit from advertising (skimming off a small share) to them. Users can do whatever they want with the profit they earn, including donating it directly to one of LiveTree’s partnered charities.
Interestingly, Darbyshire, 34, also says that the sums available from early seed and angel investor rounds have shot up recently. “The first round used to raise maybe £200k;, now we’re seeing people raise £2 million from a network of angels.”
Old school: venture-capital firms, institutional investors or a friendly bank manager.
The new way: crowdfunding, peer-to-peer lending or much bigger sums from seed capital or angel investors.
Fail to grow
Every entrepreneur stresses the need to innovate. “You don’t want a plan, you want an inkling,” says Joe Nelson, who founded TheyFit condoms in 2011. “You can’t be embarrassed to get it wrong. It’s not binary: if you mess up, you can keep playing the game. You still have 100 lives left.”
This is particularly true with online businesses, he says. “Everything is so fluid, you can change the website pages in the blink of an eye and be nimble.” Nelson, 34, would use feedback from every customer to improve both product and service.
If web-based, start-ups can do a/b testing from the beginning. That means visitors to the site will see one of two options. If there’s a big discrepancy in how much they go on to buy, the company knows which to choose. They can keep testing repeatedly to hone the site.
Sherwin-Smith, 35, found out the painful way why you have to keep innovating. He started his first business at school. Called Hitmatic, it was like an early version of Google Analytics. “It paid for my education. But Google bought one of our rivals [in the end] and our tech originally was better than theirs. I wish I hadn’t gone to university and had just worked on that.”
Head, who does the in-house catering at Brentford Football Club (150 people a day for breakfast and lunch seven days a week), argues having one consistent revenue stream is essential, especially in a seasonal industry such as contract catering.
Old school: everything polished on delivery.
The new way: fail fast, learn quickly.
Fernando is launching flavourme.co.uk in Dulwich first, before expanding to other parts of London. He’s going to advertise primarily on Facebook because it allows hyper-local targeting of ads. He says that ads can even be timed to appear when people are on their way home from work and potentially thinking about what they’d like to eat that evening.
For Randall, too, Facebook is his main place for advertising. “It allows you to target people with particular interests,” he explains. “People often have Photobooths at weddings, so I want anyone who’s engaged — weddings can be one of these interests.”
Edzard van der Wyck, 35, is the co-founder of Heist, which makes hosiery without seams. In his five-strong team, three of his staff do the social side. “We can behave like a retail brand, engage with our customers and react very quickly to what they want. It helps us to hone the product and you get immediate feedback.”
Head notes that social media is also an important recruitment tool. “I always ask in interviews ‘how did you hear about us?’ It’s usually that they follow us on Instagram or found us on Twitter.”
But it isn’t all about the new world of media, either. Nelson went on Dragons’ Den. Even though he failed to get funding, it had a huge impact for TheyFit.
“It doesn’t matter if you win or not. That’s a million people who’ve just seen your product and — unless it’s one of the really bad ones — a sizeable minority will agree with your idea. We had 7,000 hits a second at the peak of that, completely free. Those people didn’t all buy but sales still rocketed. The show gets repeated and you get another spike.”
He says there’s no need for a PR agent “as long as you’re willing to do stuff. Spend nothing, be clever, get on”.
Old school: hire a PR firm.
The new way: DIY and online marketing.
When to let go
Nelson sold TheyFit last year for $1.3 million. But the new advice — including from Kickstarter founder Yancey Strickler — is not to sell out too soon.
Fernando agrees with that. “I don’t want to be a serial entrepreneur, I want to do one thing really well. We’re a long-run business that requires shifting perceptions. It’s a bit like what Airbnb did: people couldn’t imagine renting out their homes before but now it seems normal. We want people to think, ‘Why would you go to Domino’s when you can order food cooked by your neighbours?’”
Randall’s eventual plan is to use the income from his photobooth business to move into other areas. “I’m looking at things that are more scaleable,” he says. “Start-ups are often burning cash to revolutionise something, but if you take an existing idea that works in another country, you can then put in place a manager while you can then go and pursue your passion project.”
He hopes that Flashmat would be the cash cow that keeps giving (and growing) but that he can use the photos that he owns either for “facial recognition, or other marketing uses. All the info I have could be valuable.” He notes that companies have been bought in the recent past not for their main business but for the information they hold on clients. “I’ll sell the business when it’s in a great state,” he adds.
Old school: sell as soon as a suitor comes knocking.
The new way: Please sir, can I have some more (money)?