Report: crucial factors for success in crowdfunding 

FundedByMe recently investigated and created a research report on the main elements of crowdfunding campaign success. Social media and the right team seem to be crucial for achieving the funding goal.

FundedByMe is one of the only full-service crowdfunding platforms offering capital through equity, debt and reward based crowdfunding which has funded some 500 companies from 25 countries. The report analyzes such factors as usage of various social media, the background of a company’s team or documents uploaded.

One of the main conclusions is that placing a link to their Facebook or LinkedIn on a company’s pitch page on a crowdfunding platform increases the probability of success more than 30% (31,37% for Facebook and 32,58% for LinkedIn). Furthermore 10 likes on the company profile of any of those social media portals adds additional 6% for the success (6% on LinkedIn and 5,6% on Facebook).

Another important factor is the types of documents delivered to the crowd. Reliable market statistics can help by 27% and an upright financial forecast by even 37,3%.

Lastly entrepreneurs pay attention to the background of team. If a member has a background in management and/or consulting this helps company by 26%. Relevant business education can have an influence on a company’s success by 25%. Surprisingly, possessing a master’s degree or previous entrepreneurial experience is not regarded by investors as something relevant.

“That doesn’t mean that fulfilling only one of the conditions will automatically bring you the relevant amount of money. We analyzed a dependent variable binary and checked either successful or unsuccessful outcome. Successful outcome was defined as reaching 80% of the initial funding goal”say Alina Lundqvist and Michal Gromek from FundedByMe, the authors of the report.

The report was based on the analysis of all equity crowdfunding campaigns from the Nordics, run on the FundedByMe platform since 2012. FundedByMe has 83% of market shares in equity in Nordics.

The CAGR in equity crowdfunding at FundedByMe was 449%.

“The average amount raised per campaign is €122,706. The average investment amounts €5,935. Statistically there are 46 investors in a campaign” – explain Alina Lundqvist and Michal Gromek.

The European equity crowdfunding market size (excluding UK) was worth €82.56 million in 2014. The CAGR for the industry between 2012 and 2014 was 116%.

MIDVEN BACKS ENTREPRENEUR WITH AN OFFERING FOR THE CORPORATE HOSPITALITY SPACE

A Birmingham-based company whose offering aims at firms looking to find and buy corporate hospitality packages has received £100,000 investment.

Concierge Events Ltd will use the funding to increase awareness via marketing activities and to grow the firm through new business wins.

The investment comes from Midven’s Early Advantage fund, together with Finance Birmingham and a number of business angels from the Minerva Business Angels network.

The company, founded by Andrew Vincent, has two offerings, both aimed at companies that are looking to find and buy corporate hospitality packages, such as sporting and music events. Mr Vincent said as the economy continued to pick up, more and more businesses were now increasing their spending on corporate hospitality, and Concierge had seen a marked increase in demand for their offerings.  

He added: “I’m delighted to have completed this investment.  We can now push on with our plans to grow the business.  We’re in an excellent place with an offering for any size of company to find and compare packages via our CompareHospitality website.  We also have a software platform ‘LiveAccess’ whereby companies can manage and monitor their spending on corporate hospitality events – this is vital for the bigger companies.”

Concierge Events will use the funding to market its products and services to a wider audience and over time recruit more team members.

Giovanni Finocchio, Investment Manager for Midven’s Early Advantage fund, said: “We like the simplicity of the technology and that Andrew knows the market well. Concierge will use the funding to increase awareness and win more business.”

Mr Vincent said: “In today’s world all individuals and companies use the internet to compare products and services - our CompareHopsitality website only offers packages from official suppliers at a cost no more than the official price.  And our LiveAccess platform goes one step further by also enabling companies to manage their spending, this is important for many companies, particularly for those who need to show how they comply with the Bribery Act.”

FRP Advisory high street retail administration survival index 2014 – 2015 

• 735 stores close out of 1,270 affected in 13 major retail administration
• Store survival rate up slightly to 42% in 2014 versus 35% in 2013, still down on 50% in 2012 and 67% in 2011
• Average staff survival up marginally to 50% in 2014 from 48% in 2013 and versus 46% in 2012 and 66% in 2011
• Q1 2015 store survival rates from three major high street administrations affecting 125 stores rises to 70% up from 42% store survival rate in q1 2014

Analysis from FRP Advisory, the restructuring and advisory firm, of the 13 major UK high street retailers placed into administration in 2014.

Between 1 January and end December 2014, UK store survival rate rose to 42%, up from 35% in 2013. Four large administrations that contributed to the total number of stores closed were Phones4U, La Senza, Jane Norman and Internacionale. 

Highlights of 2014 include: 

·         Store closures: 750 out of 1,300 affected; Staff losses: around 4,900 jobs lost from 9,800 affected.

·         Store survival rate for 2014: 42%, up from 35% of 2013, down from 50% end of 2012, down from 67% end of 2011, post major high street retailers failing into administrating during each year. 

·         Staff survival rate for 2014: 50%, up from 48% end of 2013, up from 46% end of 2012 but down from 66% end of 2011, post high street retailers falling into administration during each year. 

·         2014 Staff survival rate bolstered by Phones 4U

·         Excluding Phones 4U survival rate in 2014 fell to the lowest rate in four years for both staff at 24% and stores at 33% from 12 major administrations. 

Glyn Mummery, partner at FRP Advisory, the restructuring and advisory firm, said:

"The high street has finally turned a corner and is re-emerging after four years of significant store culling, in a fitter albeit leaner shape with retailers having to cope with a new norm of tougher operating margins but boosted by a return in consumer confidence and spending power helped by cheaper fuel costs.  

2014 may have proved to be a watershed for retail mortality rates from administration with only 42% of stores surviving under any new ownership structure once a major high street retailer emerged from administration, only a small improvement from 2013 but still below the 50% survival rates of 2012 and 67% survival rates of 2011. 

Stripping out the rescue of a large part of Phones4U's store portfolio by its main mobile network providers and last year's store survival rate was a mere 24%, the worst for four years.  Signs of significant improvement in the high street come from the first quarter of 2015 when early evidence reveals the number of major retailers actually entering administration has fallen dramatically.

Survival rates so far this year from high street administrations are back up to levels last seen for the whole of 2011 with just three major retail administrations since the new year affecting 125 stores of which around 70% survived as operating premises as the retailers emerged from administration restructured under new ownership, compared to a 42% survival rate for the six major retailers that entered administration in the first quarter of 2014 affecting 320 stores at the time. 

Several distressed retailers that sought protection via administration during the double dip recession of 2009 to 2011 were restructured with the assistance of record low interest rates for refinancing and emerged with a slimmer store footprint but were still forced to re-enter administration within a couple of years if they had failed to tackle fundamental flaws in their operational model to adapt to internet-induced changes to their markets coupled with a continued squeeze on consumer spending.

By 2014 the high street reached a watershed with those distressed retailers who had failed to remodel their business in the face of multi-channel buying habits - bricks and mortar, bricks and clicks or internet only delivery - either failing completely or emerging from administration with a radically different store footprint to maximise footfall spend from the most efficient locations.  

We anticipate that for the 18 months ahead as the economy continues to hold firm with consumer confidence spreading further onwards from London and the South East, there will be fewer retail failures overall but still those chains which come under cash flow pressure after years of under investment to manage through the downturn but leaving them vulnerable to sudden pick-ups in demand and strain on working capital. 

Many retailers are benefitting from the ease to shoppers' weekly spend due to lower petrol prices but with the supermarkets engaged in a new pricing war to hold onto market share there is a knock-on effect for all high street retailers as margins come under pressure. The high street has turned a corner but it is still a place where only the fittest will survive and inevitably at some point in the near to medium term the benefit of a low interest rate environment will end which for several years had allowed a few retail zombies to refinance for a last lifeline."