How and for which startups does crowdinvesting work?
The startup Boomerang recently completed a financing round totalling around 1.9 million euros for its reusable shipping packaging. Over 850,000 euros were raised through a crowdfunding campaign. We spoke to Co-Founder and CEO Marc Engelmann about how the idea came about, how the campaign went and which startups this form of financing is suitable for.
How did you come up with the idea of launching a crowdinvesting campaign for Boomerang?
We received a lot of requests via LinkedIn and Instagram asking when we would finally go public so that private persons could also buy shares in our company. The easier way to take private investors on our journey was to organise a crowdinvesting campaign instead of an IPO.
What needs to be considered when organising such a campaign in order to achieve success?
The realisation of such campaigns takes at least three months and requires a lot of preparation. A good video that introduces the idea and the founders is particularly important. We managed to convince around 490 private investors of our idea and raise over 850,000 euros in crowd capital within twelve weeks. In combination with professional investors, we then closed our seed round with a total of 1.9 million euros.
Can crowdinvesting be an alternative to conventional VC rounds in times of scarcer investor funds?
Definitely! Or even a combination of the two. There are certainly one or two VCs who see crowdinvesting as a red flag, but in economically difficult times, crowdinvesting can be a good alternative to achieve your funding target and also gather a broad group of fans behind you, who in turn act as brand ambassadors for the startup.
For which types of startups does crowdinvesting make sense - and for which not?
Startups that need money in the very short term (less than four to five months) will not find their luck in crowdinvesting. The whole process from the first discussion to the disbursement of the funds takes months and you should have that much runway. However, crowdinvesting is ideal for startups with business models that are easy to explain. Complicated software solutions, B2B use cases and the like have a harder time than startups that tackle problems that every private individual can immediately identify with - like too much packaging waste in our case.
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