3 Things to Avoid When Crowdfunding
True story: crowdfunding is turning more and more into a funding opportunity for eager-to-scale businesses everywhere. Today, we turn to Filisia Interfaces, The Accelerator 2014 finalist and one of the most inspiring ventures we have met along our way, to dig into its recent crowdfunding experience.
Let’s set the clock a few months back. The time: March 2016. The place: London. There we find the team behind Filisia Interfaces, The Accelerator 2014 finalist and a Metavallon Network Startup, aiming to transform assistive technologies, as it is about to launch its first ever equity crowdfunding campaign. Why? The team needs to raise £150,000 in order to produce the first batch of their product Monoma, that supports the access and training of people with disabilities via interactive music making and gamified rehabilitation software modules. By the end of the campaign, the results are rather lukewarm with Filisia making just half of its goal.
With the team’s crowdfunding days already behind them and the team having raised £150,000 from private capital, we asked Eirini Maliaraki, Business Developer and Founder of Filisia, to share with us the lessons the team learnt from their recent experience. Want to know more? Read on!
First Things First – What does Filisia do?
Inspired by a five year old girl, Mariel, who suffered from cerebral palsy, Filisia Interfaces set out to create and make connected devices that unleash the creative potential of people with additional needs. Its first product, Monoma, is designed to train academic, communication and motor skills through interactive games and music. Even more, it is a versatile and customizable product than can be used in different ways and settings from the classroom to individual therapy sessions. How does it do that?
“Monoma comprises of tactile controllers that use dynamic sensors that light up and take any color. It also connects wirelessly with our custom software, which offers a series of musical exercises and interactive games, designed by therapists and special teachers to support sensory integration, exercise, expression and communication”, says Eirini. Through its smart features, Monoma allows practitioners to track users’ progress and evaluate their own practice using data on reaction times, memory skills, speed and force and modify their therapeutic efforts accordingly.
Eventually, the team at Filisia envisions “to bring assistive technology to the 21st century. Our solution is the core of a platform of interconnected devices, software, and data analytics that will address the training and access needs of people with additional needs”, Eirini suggests.
Behind Filisia’s Choice to Crowdfund
With a strong social-shaping cause and a product as innovative as Monoma, the team at Filisia could easily start knocking on angel investor and VC doors at any time since the development of their MVP.
And to turn Monoma into a touchable reality, the team chose otherwise. Eirini Maliaraki takes us behind the scenes of this major decision-making moment. “We decided to do an equity crowdfunding campaign mainly because raising investment up until that day was immensely time consuming and draining, and we thought the process would be easier this way.”
Yet the choice of the best vehicle to do so did not come lightheartedly. The team ended up using Crowdcube, the most well-known platform in the startup world because of three key characteristics. First off, due to its popularity, the platform would give Filisia access to a bigger pool of investors. It would also allow the team to invite its network of friends, collaborators, and connections to support them in their funding crusade.
Most importantly “Through Crowdcube, we would tap into different networks. How? Because these customer-investors are literally bought into the business; they would have a vested interest in helping with user research and feedback, becoming brand evangelists, keeping in touch and making connections. And, in fact, some of our investors had an affiliation with special education or had kids with autism and gave us useful comments and contacts”, Eirini explains.
What to Expect When You’re Crowdfunding
When asked about their campaign, Eirini Maliaraki is more than keen to state that Filisia’s Crowdcube campaign had underwhelming results: “We reached only half of our goal. In our eyes, our campaign wasn’t successful.” Yet, she is just as fervid to share the team’s invaluable learnings from their crowdfunding experience with us and other startup founders.
#1. Crowdfunding takes time. It is a fact: crowdfunding campaigns need a lot of preparation before launch. “We estimated that we needed 1 ½ months”, Eirini shares. “In the end, it was not enough. You need at least 2-3 months to prepare yourself for the entire process.” What is this process made of? “This includes rewriting your copy so as to test it and optimize it, producing professional videos, reaching out beforehand to industry media, and engaging and warming up your community and your ambassadors”, she continues.
#2. Get early adopters. “It is very important to have at least ⅓ of the funds that you want to raise already committed on the platform before the campaign- which we didn’t have”, Eirini declares. Why? It is important for potential “investors” to see that other people are investing in your campaign. That way, they are more likely to vouch for and get involved in it. Research also shows that the best chance for campaign to gain attention is within the first 3 days upon launching.
What’s more: “Investors are more likely to make their decision based on the first performance of your campaign. If they judge that it is performing well early on, they are more likely to invest since they see that this is something that possible users are interested in”, she thoroughly explains. And data provided by CrowdRating, a UK-based independent ratings agency for crowdfunding, supports her statement, as only 18% of campaigns with a low rating for their service and/or product are successful in their fundraising.
#3. Make it to the end. Much like the famous Lenny Kravitz song, a campaign is not over till it’s over. “The work is not finished when you launch”, Eirini warns. So if you are thinking that a few posts on your social media, a couple of emails here and there, and a newsletter will be enough to get you to crowdfunding success, you may need to rethink.
“You should have a detailed daily marketing and promotional plan, organize meet-ups, follow ups, keep sending reminders about the campaign to your community and followers, and constantly generating exciting news, updates and publications. Mind the gap though exciting as it may sound it was also very emotionally draining which is why a plan comes in handy.”
Failed as not Planned: The Silver Lining in Filisia’s Cloud
So crowdfunding did not exactly work out the way the team at Filisia Interfaces planned. John Lennon once said that “Life is what happens when you’re busy making other plans” and it is indeed true in the case of Filisia. How? While in their crowdfunding days, the team managed to successfully close a funding round of £150,000 with Deepbridge Capital Life Sciences, a London-based firm that seeks to fund companies with exciting new technologies.
“Luckily, we raised the amount that we were seeking and we are now entering a very exciting period of manufacturing our system, developing our sales engine, and enlarging our team. In other words, we are coming closer and closer to fulfill our vision, that is to empower people of all abilities to lead creative and satisfying lives through the use of the latest technologies”, Eirini enthusiastically shares.
Were funds the biggest thing of value in Filisia’s attempt to raise funds online? Definitely not. “Even though we were very disappointed and tired at the end of the campaign, we felt grateful for the support we received and all the lessons learnt that will help us better prepare our next product-based crowdfunding campaign. Now, we know what needs to be done”, she says.
At Metavallon, we believe in execution-driven teams with a big vision and inspiring grit. And this is exactly what the team at Filisia is truly made of. How so? Exhibit A. The team was amongst our select finalists in The Accelerator 2014. Exhibit B. Filisia has taken their lukewarm crowdfunding experience and has turned it into a golden opportunity for -their- future knowledge. With a team this quick and ready to adapt to any challenge that comes its way, we can foresee nothing less but a bright future for Filisia.
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