Getting funded is one of the biggest challenges a start-up can encounter. Hiroes was no exception to that. We went through it. It was a journey full of excitement, joy, stress and tears. We thought it might be useful for our fellow entrepreneurs to share our story.
Business angels. The two words every entrepreneur cherish the most. The key to fundings. The gods of start-ups (ok, might go too far with this one). Finding business angels is like finding the golden goose, very hard. Especially when you are two young graduates, with little network in London.
But before going ahead with that, we should first take you through a couple of episodes:
- Building an Excel spreadsheet … from scratch
Thanks to his previous experience in banking, Raphael managed to forecast costs and expenses for Hiroes. Forecasting for existing companies with existing turnover, that he could do. But pulling numbers out of a magic hat for a company that haven’t even launched yet, can be slightly more challenging. After weeks of thinking about how to make the most accurate assumptions, which market we should go for first and much more, we eventually figured out how much we would need to reach the break-even point: £170,000. Two young graduates, aiming to raise £170,000, knowing they’ve always been in the red (student life) … Damn can it be exciting! For us this figure sounded enormous, knowing we had neither a product nor users yet. After meeting so many investors, one of them even told us “£170K? It’s peanuts, there will be very little you can do with that”. No kidding! Don’t worry about this, Investor! We sure can find a lot to do with £170,000! You are more than welcome to invest the whole amount if it is so little money for you.
But of course, this didn’t happen. Otherwise the story would end here, and it would be less fun.
- The deck
Pretty pretty PowerPoint. How many hours have we spent working on you, looking for the perfect icon no one will notice, justifying the text to perfection, constantly rewording our phrases. Creating a deck is not as easy as it seems. And no, you cannot use the already made PowerPoint templates, you would be committing an entrepreneurial crime.
In all modesty, Raphael was THE man of the situation for creating amazing decks (thank you M&A). I would work on the wording, he would make it all neat and pretty. The hard part was also to make it extensive enough that you would say everything they need to know, but short enough that they wouldn’t fall asleep reading it. Deciding what to say, and in which order to say it can be challenging. We got feedback from many mentors and had a look at successful decks available online (Tip: We used this to help us decide on pitch page orders). You can get a good idea of the structure you should adopt by doing that. But in all fairness, it really depends on your type of business.
The deck is now ready. Oh my, it’s pitching time.
An audience, a deck, and a functioning clicker is all you need to make a great pitch. Having been incubated for a few months, we experienced many weird and pitiful moments. The best one would be when you’re pitching, about to change slides with attitude and with your fancy clicker, but nothing moves. So you find yourself making embarrassing gestures to the person in charge of changing the slides, too busy taking snaps of himself. At this moment, you are strongly hoping in your inner self no one saw you doing it, but deep down, you know the truth.
Because it’s not embarrassing enough to pitch in front of an audience, at some point we had to record ourselves pitching to a camera. Let us tell you fellows, if you thought pitching to real people was hard, wait until you do this. For us, the worst about it was knowing what to do while the other one was talking, as you are filmed together. You can ask Raphael, he knows a lot about it! Get ready to go through the same experience if you choose to crowdfund.
- Business angels VS crowdfunding
Here we are, business plan written, deck ready to be pitched. At this moment we were just thinking investors will start to rain on us. Not exactly how it went. We pitched several investors, hoping to convince one of them that we were the ones worth investing in amongst all start-ups. But we found out soon enough that getting the first investor on board was harder than it seemed. Many wanted to see a finished product with active users. Although we bootstrapped until then, there was a reason why we needed funding: to finish the product and get users. You can see the trick here.
One day, while eating at our favourite restaurant – Shake Shack – (we thought it would really add value to this article to mention it), we met someone who suggested to do a crowdfunding campaign. Although we initially thought that crowdfunding would not be for us, after taking the time to consider this option (and a few unsuccessful meetings), we finally decided that it could be a smart way to get visibility for potential investors and get all of our network to participate in the campaign.
So crowdfunding it was. We chose to apply to the most well-known crowdfunding platform in the UK that would offer equity in exchange of investment, as it is much more difficult to crowdfund for free when you are creating a service rather than a physical product, simply because you can send the actual product to investors. For all these reasons, Crowdcube came at the top of the list. But deciding to apply is one thing, getting in is something else. The acceptance rate on this platform is only of 2%, which made things a bit more complicated. We really had to prove that our idea could be a real game-changer in the event industry.
After 234 calls with Crowdcube analysts, 1,452 exchanged e-mails and 10,234 Diet cokes (yes, we are very health-conscious), we received THE email we were waiting for:
Hurray! First victory! Now the focus switched to writing the best pitch page ever and preparing the introduction video we mentioned previously, in order to seduce investors.
- You are live!
After spending more than a month on the preparation of the pitch and the creation of the video, we were live on Crowdcube. Monday 9th May at midday was set as the kick-off date. The campaign was planned to last for 30 days. If we didn’t reach our objective of £150,000 by then … all the money would simply return to the investors and Hiroes would have … nada! (less of a Hurray).
To make things even funnier, the two first weeks of the campaign happened to be final exam weeks for both of us. This is the kind of problems you get when you want to brag about studying and creating a start-up at the same time. No choice, we had to suck it up and keep going. One exam down, one pitch, another exam down, another pitch… We’re not going to lie; it was tough to handle everything but we were so motivated that nothing could stop us.
On the day of the launch, we had very bad news. Several investors from abroad could not invest with their credit card. Except that almost 50% of our early investors were from abroad.
Crowdcube uses Stripe as a payment system, which does not accept credit cards. What they forgot, is that in England debit cards might be very popular, but in some other countries such as France, they are only for teenagers. So we decided to change our focus and to target teenagers (if only). No it wasn’t that easy. Firstly, we lost many investors who couldn’t bother to do complicated payment systems for small amounts (and we don’t blame them, we would have done the same). Secondly, this alternative solution was only allowed by Crowdcube for big amounts, so bye bye to half our supportive network who we kept telling they could invest as little as £10!
And for the big guys ready to invest a large enough amount that was a hell of a journey. Indeed, they had to send a copy of their ID and proof of address to get approved as a pledger, as if it wasn’t hard enough to find investors (big up to all of them, you didn’t let us down).
- Completion strategy
If one thing, Crowdcube was great at customer service. They were always here when we needed them, very proactive and gave us many tips regarding the campaign. One of the most important one was to divide the campaign in 3 phases. The first one was to get the investors we discussed and agreed with prior to the campaign to invest at the right beginning. We had also to reach out to our inner circle. They would make the first move and encourage other ones to do the same. This step was crucial for the success of the campaign.
The second phase was about reaching out to our outer circle. In other words, the guys you know but you don’t say Hi to in the street. Once you have stretched your extended network as much as you can, comes the last phase. Everyone you know from near or far, strangers. Basically, you have to reach out to everyone. LinkedIn, Angel.co, Facebook, Twitter, all means are good to get as many people as possible to complete the round.
Following this strategy worked out well for us. £25k in the first 48 hours. 4 weeks later we reached 80% of our target. We then managed to negotiate an extra 14 days to extend the campaign. Imagine our faces if we had to lose the £120k we worked our ass off to get. In the end, we only needed 7 extra days to reach the target.
And here we are, on the 13th of June, contemplating the 100% on the pitch page. Hiroes made it! With a £20k investment previous to the campaign, we had a total of £170,000 raised. For sure, Raphael and Salome from the past would never have thought they would overfund. And yet, it all happened.
Relief, joy, excitement, tears, it is difficult to explain that feeling of seeing all those long hours of work finally rewarded. We thought of this moment for a long time, imagining the celebrations we would do once funded. You bet, we literally high fived and got back to work.
£170k, from people we know, from strangers, in our hands. You’re talking about a stress. Celebrating was the last thing we wanted to do. Instead we kept working even harder, tried to figure out the best way to spend these funds, and promised ourselves to celebrate once the platform will be up and running.
We would like to thank everyone who supported us throughout this journey. This campaign was a huge milestone for us and we wouldn’t have made it without all of you guys. Now, let the serious stuff begin!