Crowdfunding: A Personal Note
Before we start, we promise that this is not just another sales email about why you should invest in Pollen + Grace - we’ve already sent enough of those. It is about crowdfunding though - not because we want to convince you to ‘join our journey’ but because we as individuals were very naive to crowdfunding before we started our own campaign, and wanted to share a little about what we’ve since learnt.
We’ve so often dismissed the emails and Insta posts when companies we love are crowdfunding because we simply don’t understand what it is and assume it’s ‘for people with money’. Oh, how wrong we were (and oh, how many opportunities we’ve missed because of this). Crowdfunding has lead to many conversations about money, both at work but also away from work, with friends, and that’s something we’ve never had before. It was empowering to sit at brunch with a group of girlfriends, and discuss which apps we use to invest in companies - from nutmeg to kickstarter. With the world of finance and investment so commonly male driven and male oriented, this conversation was the biggest ‘f*** you’ possible, and there's nothing more wonderful than seeing the women around you spearhead their financial future. Within these conversations there’s also been such a wide range of salaries, and financial situations, but the thing that prevailed above that, is how accessible these platforms were to everyone - it doesn’t matter if you have £20 spare or £200, the benefit is still the same. So today, we wanted to share a little bit about what we’ve learnt so far, in the hope that we can empower others to research the opportunities available to them.
I guess a good place to start (and literally the no.1 thing most of us asked in our first crowdfunding meeting), what is crowdfunding? In the most basic of terms, crowdfunding is when you publicly raise money, from anyone who wants to invest. You host the campaign on a platform (in our case Seedrs) and have access to their network, as well as our own to try and raise awareness of the campaign and get people to invest. It’s a pretty popular way for companies to raise money, and an alternative to going down the private investor route.
Why do people invest? The simple answer: to make money. A lot of our ‘big tickets’ (£5000+) are from people who tend to invest in various companies, and may already know about Pollen + Grace or have a relationship with our founders in some shape or form. Generally speaking, they would hope to get back 3 to 5 times what they invested within a 5 year period. So imagine you put in £5,000 (lots of imagining here) whilst our company valuation is £5mil, and then our company value continues to grow. 5 years from now, we decide to sell the company, at which point we’re worth £25mil (5 times more than when you put in your £5,000). This means that those shares you own are also worth 5x more, so when we sell, you’ll get back £25,000. And the exact same applies on a smaller scale. If you put in £10, you would get back £50 in this scenario, £50 would be £250 and so forth.
Basically, it’s the complete opposite of instant gratification. If you believe in a company, it’s the opportunity to help, and support them with a long term reward in return. We’ve spoken to a lot of investors throughout the process and the general consensus is that (if the company is stable and not too risky), it’s a good place to put a small amount of spare cash, with a nice surprise should they sell a couple of years down the line. Of course there is the downside of losing the money should the company not succeed, but that’s why you have access to all things finance and strategy beforehand. Yes, it definitely requires time and research to ensure your investments are safe, but that’s part of the fun.
“With the world of finance and investment so commonly male driven and male oriented, A CONVERSATION BETWEEN WOMEN OF WHAT WE USE TO MANAGE OUR INVESTMENTS WAS THE biggest ‘f*** you’ possible”
Now onto the next bit, why are we crowdfunding? Just to give you a little insight, we ran Pollen + Grace with no investment for 1.5 years. Then, in November 2016 we took on private investment from one person, who is now our chairman. We since brought in 3 more investors, all privately. Crowdfunding allows us the opportunity to take a different approach, but also to create a community of knowledgable, helpful contacts that we can go to for advice, help and ideas after the raise. Yes, it’s an option to simply invest your money and leave us to it, but there’s also the opportunity to help us grow and provide feedback and ideas.
We’ll be launching our lunch boxes and breakfast pots in Tesco and Co-op (!!) but to guarantee a successful launch, we need to do something about our ‘we have no marketing budget’ situation.
As for why we’re raising investment? If you’ve been on our Seedrs page, you may have seen that we’ve got some pretty huge launches coming up in the spring. We’ll be launching our lunch boxes and breakfast pots in Tesco and Co-op (!!) but to guarantee a successful launch, we need to do something about our ‘we have no marketing budget’ situation. Winning big listings such as these is really, really incredible but it also comes with costs much higher than the kind of launches we’ve had so far.
Why do we need more money to do this? (e.g. why do all companies need investment?). Put as simple as possible, we need to support spend that isn’t yet covered by our revenue. This means we need additional money on top of the profit made from selling our products. As a young company, it is normal that the small amount you make from your products should (if all goes to plan) cover the cost of making it and any overheads such as rent and salary. If you want to spend on top of this (e.g. marketing and advertising) you’re going to have to look elsewhere for that money. For example, we took our initial private investment to create our production facility and build the infrastructure to create and distribute our products. This raise is about supporting those products once they’re on the shelves - from better shelf positioning, to digital ads, in-store POS and promotions (and yes, everything from where you sit on the shelf to uploading photos to a retail website costs ££££).
We completely understand that crowdfunding isn’t something that everyone is interested in, or wants to be a part of - as we said, before we were running our own campaign, we had little understanding of how it worked and just associated it with the tech industry. The more we learn though, the more we want to, as individuals, continue to invest in other companies. We really hope this gives a little more insight, not just into us and why we’re crowdfunding, but why such platforms exist, and the benefits of using them. We’ll be raising until Mid-March, so head over to our campaign to have a look, or just take comfort in the knowledge that we’ll be back emails with recipes and nutrition advice in less than two weeks - thanks for sticking with us!