Let’s deep dive into what we look for when we invest in Seedrs campaigns.
Crowdfunding into tech companies can be very rewarding, and likewise, it could be a complete waste of money if you pick the wrong one.
Since building Expert Apps, both Danny and Darren now invest in tech crowd funds too, we are going to share what it is we look for in a company.
We made the decision that until we tick these boxes ourselves, we will not invite other shareholders to join us by raising on Seedrs, instead, we will bootstrap the business ourselves.
1. Traction and Demand
We want to know that people would use the product, and part with their money.
2. Past Prototype
Danny & Darren like to invest in a product that is already past prototype, not because it means the product is further along in development, that matters very little.
We invest in companies that are no longer an ‘idea’ because ideas come and go all day every day, execution is the key. We want to see that the founders have worked hard, that they have struggled, and that they have and still got through the other side.
Business is not easy, We are firm believers that businesses need to build from bottom up, exhaust all avenues and get a product up and running before seeking funding.
3. The ability to scale
We love tech, not only because it’s something we understand but because of its ability to grow is just limitless. Tech will evolve.
We are particularly interested in companies that could improve their existing offering into the following:
- Green Tech
In summary, these are disruptive tech sectors with limitless possibilities and attract high-level investment often as a Series A, funding and beyond.
4. Resilience leads to evolution
Often changing, taking U-turns and pivoting in a business can scare investors, for us its quite the opposite. We like to see that a company has tried things and recognised that they need to evolve or there might be a better way of doing things. We also are very careful to see how long they give each concept before writing it off, as for us there is a too long, and a too-short time frame.
5. Social Profile = Social Proof
This is a fundamental part of our investment decision if the founders are willing to put their head above the pit and say hey this is me! I am the founder, I am proud of my product and the success or demise lies on my shoulders, then that gains them many points in our investing decision.
It’s not that alone, it’s also how others are reacting to their growth, and how they are, in themselves as people, growing. In fact, we have been known to stalk social profiles to see where the founder was, and how their journey has been. Do they have the respect of their friends, family and followers?
6. Inviting their nearest and dearest
Do the founders believe in their product or company enough to be bold and invite their friends and family and communities to be shareholders? After all, if this investment goes wrong, they are going to have to face everyone. If they are not prepared to do that, then we do think twice about our investment decision.
Although we are silent investors, investing for a decent return on investment, we still believe it’s important that our values align with that of the companies. We do not wish to help a company succeed by investing our money if it cuts throats along the way. It doesn’t matter what numbers it is looking to produce.
8. Global Expansion
The world is a big place, if the company demonstrates traction and sales on the small pond that is the UK, and has a product or service that can be rolled out to a global market then this becomes very interesting.
9. Ability to attract series A funding from VC’s
We know tech, and we know how attractive tech can be to VC’s and large investment funds.
If we are confident that the Seedrs round will just be a feeder to get the company going, and that they have intention or offer an attractive proposition to VC’s that will very comfortably invest, 10’s of millions, even hundreds then this becomes a lot more investable because then you have a sure-fire chance of being the next ‘best thing’ and even if you didn’t quite make it your initial investment has just skyrocketed
A good example of this is Oculus Rift.
Palmer Luckey started Oculus Rift as a side project from his parents’ garage. He had been experimenting with virtual reality since he was 15 and attending community college. Then, he continued developing the VR headset as a side project while he worked as an engineer at USC’s Mixed Reality Lab. During that time, he started the crowdfunding campaign.
The 2012 crowdfunding campaign far surpassed the $250,000 goal and raised a total of $2.4 million. When the product was still in its prototype stage in 2014, Facebook acquired it for $2 billion in cash and stock. That’s one healthy equity gain!
10. Return on Investment
Finally, and strangely this is usually last on the list because we believe that if you address the earlier points then there is a very high chance of you making a significant ROI.
This is exactly why we waited until now to go live with our Seedrs campaign!
We wanted to demonstrate traction, growth and support so that before we invited friends, family and others to get involved and be shareholders we could be confident that we had what it takes to make this a global enterprise and a success story for years to come.