Raising pre-seed funding using "incrowdfunding", creating a peer fund of contributors.
Hi, this is Sander, CEO Unless.com, and today I will share with you how we managed to raise pre-seed funding last year. As you may know, Unless is a personalization engine for websites. You can create tailored variations of your existing web pages for your diverse audiences - in order to increase your conversion rates dramatically.
Of course, last year, our product wasn't that good yet, so we needed some money to keep things going - until we could release the next version. So, we decided to raise funding. You can do this in many ways. You can call a VC fund and ask them to invest in you - but typically, they will say something like "yeah it's kind of early, so we're gonna wait a while until you show traction" and so on and so forth. Other options may be angels, friends and family, or even crowdfunding. I love crowdfunding!
Crowdfunding is really awesome. You just show people a great product and they will give you money in return for a possible future gain, or maybe access to the first version of your product - which is super awesome. However, our product is hard core technology-based, so it kind of misses the "cuddliness" that successful crowdfunding projects sometimes need to get money from just about anybody.
So, we decided to do it differently. We coined the term "incrowdfunding". What does that mean? We made this giant list of peers from the startup scene in Amsterdam. By peers, I mean experts in anything that has anything to do with startup life. For example programmers, but also UX designers, financial experts and even legal people. All these things you kind of need, right? We had a few rules. We were only going to pitch once, and then it was either go or no go. The ticket size was going to be 5,000 Euro and up.
The agreement was a SAFE agreement - Ycombinator style, which is essentially a simplified version of a convertible note. In return for that, you would become a member of the peer fund and be entitled to certificates according to the amount of money that you invested. We started emailing and calling people and within 3 weeks we managed to raise almost 300 thousand Euro as an investment which was pretty successful in our eyes.
To this day, the members of our peer fund are helping us out. We even open sourced our code for our peer funders. So, if you're in the peer fund and you're a programmer and you would like to contribute with your expertise - you can simply access our code and start building features. So, if you're a start-up founder and you would like to try the same thing: give me a call or send me an email at firstname.lastname@example.org and I will give you all the information that I have and hook you up with the right people. So.... I will probably speak to you soon!