James Kilford, is the co-founder of Senta, a new startup in Bristol, which recently successfully raised investment on the Seedrs crowd-funding platform. He was looking to raise crowd funding to the tune of £75K, and managed to reach that figure in a mere 7 days, and then went on to raise almost double the total he went for: £139K.
So how did he do it? Read on to find out, as James talks quite candidly about the whole process and shares his insights.
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TechSPARK: Please could you tell us what Senta is?
James Kilford: Senta is a new cloud service to help accountants run their practice. Our platform automates much of the admin work in an accounting practice, and that means the accountants are free to spend more time doing the consultative work, advising their clients and so on.
TS: When did you decide you were ready to raise investment through crowd funding?
JK: From the beginning, we decided to build the product and to seek investment for growth. We’d got to the point of the product being well advanced, so the time was right to look for investment.
TS: So how much did you raise in this round?
JK: We raised a little over £130,000 from more than 200 investors.
TS: Did you consider other sources of investment?
JK: Absolutely, yes. We talked to funds, and to angels as well. But we already had a good relationship with Seedrs, and ideologically we really liked crowd funding, so it just felt right for us.
“With crowd funding you need to wear a lot of hats! You need to become an expert on forecasting, planning, script-writing, screenplays, graphics, copywriting, legal…”
TS: What are the main challenges?
JK: Like most aspects of starting a business, with crowd funding you need to wear a lot of hats! You need to become an expert on forecasting, planning, script-writing, screenplays, graphics, copywriting, legal… it’s definitely an interesting process.
TS: What do you wish you knew then that you know now?
JK: I wish I’d known how important it is to have your facts and figures to hand: you need to prove everything – every fact, figure and statistic – so start recording your information sources now. It’s amazing how you do research, and quote these facts and figures… and then when someone asks you to prove it, the sources of the information have long since left your mind. So, yes, definitely keep a note of all your market research sources!
“Investors like to invest in hot property, so you really need to launch your campaign with lots of people already having invested”
TS: What was the best advice you were given?
JK: I was told a few times that we had to bring our crowd, and that was definitely good advice. It’s easy to assume that a crowd-funding platform will just produce investors for you… but that’s not necessarily the case. Investors like to invest in hot property, so you really need to launch your campaign with lots of people already having invested.
TS: And what form does that crowd take?
JK: Well, friends, family, former colleagues, potential clients, perhaps people you’ve talked to along the way. It’s really important to keep everyone up to date with your plans, so that when you do launch, they’re ready and expecting your campaign. We made sure we kept everyone up to date with our plans and our progress – especially early-stage investors from WebStart Bristol – and that turned out to be a good strategy.
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People don’t need to invest a big amount, but if you get quite a lot of contacts to buy even just one share, then your campaign becomes suddenly very attractive. You know, if you’re looking for a restaurant, you go to the busy one, right? Even without knowing anything about it, we’re naturally drawn to it.
TS: What needs to be done before you kick off?
JK: Personally, I like a solid business plan; not necessarily long, but I think it’s important. I know that business plans are not in vogue at the moment, but if you’re going to persuade people to part with their money, you need to be credible, and that means knowing what you’re about and where you’re going.
“Plan your campaign… It can be daunting to just magic a campaign out of nowhere, so having a plan that you can follow makes it all a bit easier”
Also, I would say plan your campaign – networks you can tap up, emails you will send, tweets, LinkedIn posts, contacts you can get on board. It can be daunting to just magic a campaign out of nowhere, so having a plan that you can follow makes it all a bit easier.
TS: And what about setting your valuation?
JK: Ha! Well, I guess we could discuss valuations at length! We decided to set our valuation quite low I suppose, but we didn’t want for that to be a major factor in whether people decided to invest. Sometimes you see a startup valuation and think that it’s just a bit high.
TS: What was the scariest aspect of the campaign?
JK: Just before launch. The night before the campaign opened, I still was feeling pretty tense! Only about 40 per cent of campaigns get funded, so there’s a really a good chance of not making it. I’d seen good campaigns go live on the platforms and then not hit their target. But our account manager at Seedrs was very encouraging!
TS: But you must have been pretty happy that you were ready for launch?
JK: Well, yes, I suppose so. We spent time trying to make the campaign as good as possible. People have said that our business is ‘boring’… so we tried to make sure that the campaign and video were really clear.
“Yes, your investment information should be short, but it really has to be underpinned by a much greater understanding of the business”
TS: Could you tell us a little more about the campaign?
JK: Well, the first thing I would say is that it’s important to keep it simple and don’t cram in too much jargon. I think that it’s really critical to get your message across in the first paragraph, so that people don’t get bogged down as they’re reading.
And obviously you’ve got to really understand your business. Yes, your investment information should be short, but it really has to be underpinned by a much greater understanding of the business.
TS: What about the video?
JK: Again, I think clarity is everything: people shouldn’t be distracted because they don’t understand, they can’t hear, or the camera keeps cutting to your ear! I’ve invested in various companies on Seedrs, and the ones that I invest in are the ones where the founder draws you in from the first sentence and gives you confidence.
Oh, and I think it’s good to have a bit of time at the beginning for people to relax, adjust their headphones, volume, whatever…
You can see the video Senta made for Seedrs below:
TS: What makes a great video?
JK: Well, I’m not sure that I’m qualified to answer that! A sample size of one isn’t scientific is it? But I did a lot of research and asked myself what made me want to invest in someone; what were the themes that stood out in successful videos.
“Get your basic info across in the first 30 seconds of your video. If you can’t get that information out there right at the beginning, people are going to lose interest”
I think the main thing is to get your basic info across in the first 30 seconds. Someone should be able to stop the video after 30 seconds and say, “This is Fred, he’s started a business called Acme that makes a new kind of widget”. If you can’t get that information out there right at the beginning, people are going to lose interest.
And it’s important to respect the viewer: you’re asking them to invest their money in you. I think there’s a lot of trust involved, so: look smart, iron your clothes and look into their eyes.
Oh, there’s one more thing: have a strong call to action at the end. If you want people to invest, then ask for it!
TS: How did you produce the video?
JK: Well, production quality is important: especially the sound level, music and so on. We got a freelancer to film and edit our video, and it made things much easier. And have plenty of pauses, especially after key statements. If you say they’re going to do X,Y & Z in your business, then potential investors need a moment to reflect on that… let it sink in.
TS: Okay, you’ve finished your video you’ve launched. What’s next?
JK: Then, hit your networks hard! Post on Facebook, get your friends to buy a share. Keep them updated. They might know people. All founders should post to LinkedIn often. People see a tiny fraction of your posts, so give yourself the best chance. And don’t be afraid to ask people to share with their networks. Also Tweet, blog, add to your email footer, post on Facebook, add a link to your website… It all helps reinforce the message.
TS: What is it like running the campaign itself?
JK: Well, I was really surprised at how many questions were asked. A lot of them were asking for a business plan and so on, so it’s good to have some additional collateral to send, covering tax breaks, financials, and so on. Don’t be afraid to keep detailed information back though – it’s your hard work that you’re protecting.
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But as well as those, there were lots of really interesting questions from people about different aspects of the business. It’s good to answer as promptly as possible, and if you can’t answer their question straight away, then say that and get back to them when you have the information they wanted.
“It’s essential to treat everyone equally: you never know who’s going to be your biggest investor!”
TS: What about awkward questions?
JK: Yes, you get those! It’s critical to respect the investor and not to try and bluff. If you don’t know, then say so. People will accept that you don’t necessarily know what’s going to happen three years hence or how your strategy will develop.
Oh, and I would say, most importantly, it’s essential to treat everyone equally: you never know who’s going to be your biggest investor!
JK: Well, two things really: the first is that founders aren’t more involved with the team at the crowd-funding platform they are using. I was really shocked to find out that people raising money on Seedrs weren’t really in touch with them very much. We had a great working relationship with Seedrs, and that gave us a lot of confidence that we were doing things right, that we understood exactly what to expect, and ultimately that we got a good deal.
TS: And the other?
JK: That so many people got in touch to offer help. People who’ve invested in the company have gone on to give us help about all sorts of things like digital marketing, social media, testing – all sorts of expert stuff. It’s great that investors want to get involved.
TS: You mentioned being involved with the internet incubator WebStart. How was that for you?
JK: WebStart was amazing at Bristol’s Engine Shed. It was a hectic ten weeks, but Mike [Jackson] and his team of mentors gave us a lot of really excellent advice and guidance in a whole range of disciplines from product design through to investment and legal matters. And we’ve been introduced to so many different people as a consequence too. I don’t think we’d be where we are, had we not been through the WebStart programme.
“Bristol’s a terrific place to start a business – especially a tech business. There’s a load of support, tech groups, meetups, and so on, and of course it’s a pretty cool place to be”
TS: How do you find the Engine Shed?
JK: Well, it’s great… we’ve been based at the Engine Shed since the beginning and it’s been a really incredible location for us. The team here is wonderful – always going beyond the call of duty to help us. And we’ve made a lot of friends and contacts through the Engine Shed too – there are lots of small companies in the same position as us, and there’s always someone interesting passing through the Business Lounge!
TS: And lastly, what’s it like being based in Bristol?
JK: Awesome! Bristol is in my blood, so obviously I love the city. But trying to look at it objectively… it’s a terrific place to start a business – especially a tech business. There’s a load of support, tech groups, meetups, and so on, and of course it’s a pretty cool place to be.
Thanks to James for taking the time to share his experience with us. We’re looking forward to seeing how Senta develops over the coming months and years. You can keep up with Senta at the Senta website or by following them on Twitter: @sentaHQ