How CornerDrop raised £75k crowdfunding Part I
I came across CornerDrop recently and two things were immediately of interest – the business itself and also how they appear to almost effortlessly raise funding. I asked Andrew Lasota, CEO of CornerDrop if he would share the secrets of his success with Tamebay readers and this is a description of their journey and tips and tricks he can pass onto TameBay’s readers.
If you’re looking to launch or grow and expand a business, crowd funding is an alternative to both traditional bank lending and the more innovative small business finance loans available. However it comes with it’s own set of challenges and as Andrew Lasota says “I’d like to say it was simple and straight forward, but nothing really ever is – but it’s not impossible and perfectly achievable for any individual“.
How CornerDrop raised £75k crowdfunding in 2 days Part I
CornerDrop was devised to allow access to Click and Collect for everyone, regardless of which website, courier or location you are. It seems ridiculous that each and every courier can develop their own drop solution, but access is only available if you use their vehicles. Therefore we have thousands of drop points, but they are disparate and inefficient.
Even worse, they only care about you if you are a big online retailer. What about the thousands of smaller retailers who are therefore excluded from this exclusive club. That just seems utterly unfair and illogical. Certainly an unfair competitive advantage.
CornerDrop has been built to address all these restrictions. Anyone can use the service, any bona fide business can become a drop location and any online retailer can offer the service on a PAYG basis, without changing any delivery processes or agreements.
Customers are happier, the CornerDrop locations appreciate the extra money and footfall, and the online retailer removes a big barrier to abandoned checkouts. Essentially, Click and Collect Everywhere!
We ticked off many of the simple things quickly and cheaply early on (incorporation, shareholder agreements, articles minutes etc.), but these items are critical starting points and very worthwhile, if done correctly. You’d be amazed at how many businesses operate without some if these things in place.
Also, we were part of a Start-up Accelerator at the beginning of 2014 which was of great help in getting us ‘investor ready’.
Having a solid business plan is critical as it forces you to look at every avenue possible and really drill down into the facts and figures, competition and opportunities/threats for your business. As we were truly a Start-up (no recent sales figures, new concept and new team), getting buy-in can be a challenge. Knowing the business and industry in detail is a great asset in discussions, and especially so in weeding out approaches from, for want of a better word, ‘sharks’ in the start-up community. Beware, they are out there!
Without going into too much detail, we tested CornerDrop in 2010/2011 (before Click and Collect really existed) with 70 locations and actual sales, this helped a great deal. It also showed a commitment from myself personally and highlighted key areas of business learning. This added gravitas to the plan.
Although this document not 10 months old, it has already developed and changed markedly. However, do not dismiss the action involved in completing it. It can be painful occasionally and may never be referred to again (in its current form), but it really does help.
Also, do not underestimate its power. When done well, it can, in itself, be enough to convince an investor to take you seriously – that is a big leap! However, if you are already trading, this should be no problem.
Government incentives are key. It is essential to get SEIS/EIS pre-approval in place. It takes around 6 weeks to get the letter back from the Government, so get your application in early. You will get many offers from many organisations to complete this task for you – ranging from £500 to £2,500! We got ours for the price of a first class stamp! You can too!
If you have completed your business plan, complete the application through seismarket.co.uk. Print and post the documents. Our business plan was not complete, so we sent a short 4 page overview document.
Without this in place, funding will be very much harder – I would suggest, don’t even try without it!
Further, if you have friends or family who wish to invest, this is the way to do it – do not accept direct funds from them, it is extremely tax inefficient – this way, they get half their investment back in the first tax year, most of their investment back should you fail, and should you succeed, they pay less Tax on any profit!
Obviously, research this in detail, but here is a very good overview on the Seedrs website.
People, or rather your team, are also the one thing investors will particularly look at. Tidy up your public profiles (Linkedin, Facebook etc.) as this is where individuals, who do not actually know you, will seek some kind of background! This is true of everyone on your team.
It is difficult for a single person to raise funding. Two people, much easier, three, even better. More, not so much! Stick to three if you can.
At the start, I was very much on my own, but I had a very clear idea of who and what skill set that person needed for us to succeed. I found Dan (our Chief Technical Officer and co-founder) through an organisation called FounderDating.com. Yes, it is exactly as it sounds, but it worked for me! A few meals, chats and false starts, then eventually finding my co-founder with the right skill set and personality.
If you have your team already in place, all the better as this is the hardest part for many people.
Once these minimum key parts are in place, the actual ‘raising’ process starts.
Come back tomorrow for Part II where Andrew talks about pre-fundraising preparations and then on Thursday for Part III, the fund raising itself.