Posted on September 4th, 2009 by Charles Armstrong
It’s now one month since we announced Trampoline’s crowdfunding project. As Techcrunch reported we rapidly received commitments for a third of a million pounds. We’re now close to initial completion at half a million pounds with a solid pipeline of investors moving towards the second stage. At this point certain patterns are evident which may be of interest to anyone planning a crowdfunding initiative.
First, the early commitments we received mostly came from people who already had some connection with Trampoline. This included customers, friends of shareholders and friends of analysts who’d written about us. These people were only one or two or steps away in Trampoline’s network so there were direct personal experiences and trust relationships. This provided the foundation for them to commit quickly and take advantage of the “early bird” share price.
Second, whilst we were planning the crowdfunding process I spoke to several established technology entrepreneurs for advice. As well as giving me their feedback and suggestions these people introduced me to other figures in the technology and entrepreneurial world, who in turn made further introductions. This cascade process, which was unanticipated, has proven to be immensely valuable. Not only am I learning from people who have created hugely successful businesses, several of them also want to invest or play a strategic role in Trampoline’s development. Having even one of these people involved in the company could be transformational.
Third, since we launched the initiative there’s been a steady stream of high net worth individuals certifying on the website and approaching us to find out more. I would estimate that something like two thirds of these people are professional angel investors, who have invested in multiple growth businesses and know exactly what they’re looking for. The remaining third are wealthy individuals who don’t have a long track-record of venture investing but they heard about what Trampoline was doing and were intrigued about the opportunity. These people, both the experienced angels and the first-time investors, have no previous connection to Trampoline either directly or through their network. Consequently there is a different pace to discussion as trust is established and information gathered. Access to due diligence materials is particularly important for these investors.
Fourth, and somewhat to my surprise, we’ve been approached by several venture capital funds who are interested in participating in the crowdfunding offer. I expected the model would be unattractive to VCs because we’re offering ordinary shares without the preference rights VCs usually demand. However I suppose it’s a good way for a fund to make a small bet alongside others, with minimal management overhead. But it remains to be seen whether these funds will actually come through and invest.
Those are my observations to date. It’s been wonderful to see so many people discussing what we’re doing. Right now I suspect opinion is split with a lot of people still sceptical that crowdfunding can work for a business like Trampoline. On current evidence I’m optimistic we’re going to dispel that scepticism.