In the upcoming weeks, founder of Favoroute Frederieke Wolter, will blog about her experiences of starting a business, facing a crowdfunding campaign and about being a female entrepreneur. In today’s first blog, she will discuss how to use your network in your crowdfunding campaign.
Blog by: Frederieke Wolter, Founder Favoroute.com
After three years of hard working, looting our saving accounts, only eating oatmeal with water and not having traveled, the time had come that Favoroute moved up to a more ‘professional’ phase. The majority of the team had been working for limited income to bring Favoroute as far as we are now. For Favoroute it was time to gain a more secure base. That’s why we decided to start a crowd funding campaign! It turned out to be the right choice: We raised 115.000 euros within 40 days, after closing our first round. What have we learned from this campaign?
“Great and determined team, new business model for travel guides, and a focus on valuable original content” – Yme Bosma about Favoroute.com
Crowd or ‘network’ funding platform?
For the last two years I was considering different financial options: conversations with VCs, ‘Business Angels’ (informal investors), crowdfunding platforms and even banking loans. Based on these conversations I decided to work with a network funding platform called Leapfunder.com. Leapfunder is a young Dutch network funding platform that enables network funding within your network. This is why co-founder Merien ten Houten of Leapfunder calls this “the networking funding platform”. This platform suited me very well, since I found some informals who were willing to invest.
“Awesome idea, ambitious entrepreneur with passion and talent!”– Ras Lalmy about Favoroute.com
Together, all informals summed up a good amount of money, but they needed to invest separately as they didn’t know each other. Thereby, a lot of enthusiastic Favoroute fans wanted to help us financially as well. Among them were mostly entrepreneurs who understood the risks and the struggle we had to go through for the last 2 years. Another group of informals, the so-called early adopters, were people who believed in our concept and who had often said to me: „Frederieke, I also like to reap a piece of the Favoroute success!” After a while, the list of possible investors was growing and I calculated a minimum amount of 85k, just from my network! This was one of the reasons for me to decide to set up a crowd-funding campaign.
“I believe in you. I believe in risk. I believe in Favoroute” – Sandra Smits, Travel Designer Favoroute
When the decision for network-funding was made, we had to choose a platform. One of the potential investors, a former banker who was well aware of the different platforms, was impressed by Leapfunder, and in particular by the financial structure which was offered to investors. In this phase, it was very tricky to valuate a company like Favoroute, so the use of the convertible notes with valuation at a later stage was a perfect solution. Moreover, the first investors would reap the benefits since they will receive a large discount when a bigger investor will invest in Favoroute later on.
“Great idea, committed entrepreneur with perseverance. Go Frederieke!” – Arjen Noorbergen, Quby about Favoroute.com
For investors another benefit was the fact that Leapfunder was checking companies and performed a due diligence. In our case the negotiation was done by two ‚larger’ investors, so ‘smaller’ investors could easily ride and trust on these negotiated terms. The last reason for choosing Leapfunder was that we wanted to give our Travel Designer community (travel bloggers and journalists) the opportunity to invest. I thought this was important, since they are building our content and therefore they are an important part of our success. In case they were willing to participate, we thought it would be a good idea to give them this opportunity. Leapfunder was perfect for us!
“Content is king. Frederieke and team are a committed and hard working team! They go for the best!” – Tijntje Louwers, Squla about Favoroute
“I have been following the favoroute platform development and the people who are building it from the ground up for quite some time now. The idea is unique and the people who bring it to live are extremely driven and creative. I am more than happy to invest!” – Wouter Lipsius about Favoroute
As “The networkfunding platform”, as they slogan themselves, Leapfunder fits my personality very well, since ‘networking’ is one of my best qualities. Before I started with Favoroute, I created a large network in the Netherlands and abroad during my studies and career. But, having a network is not enough. The people in your network should also believe in you, the concept AND the team.
“I have invested in Favoroute project because I wished I would have got the idea first !” – Julien Lefort about Favoroute
Closed vs. Open Networkfunding
We opted for a closed round at Leapfunder, which means you need to be invited to see all investor information. We briefly considered making this an open round, but the reason we did not choose for this was of strategic nature: I firmly believe you gain the most from an open ‘network-funding’ campaign when you already have had some media attention. We were not ready. Moreover, our promise “you can build your own travel guidebook” was not implemented yet; when Favoroute becomes clearer to users, an open network funding campaign would be more obvious. Maybe this will be our next step.
“Appealing and inspiring concept led by a nice woman. Success Frederieke & team”– Anonymous Investor about Favoroute
Can you predict the funded amount?
When I wrote to my network (former colleagues, friends, family, people I met along the route) before the campaign started, some of them told me they wanted to invest. However, it was still not sure if they actually would. During these 40 days of crowdfunding, I learned that you cannot predict this. Of course, I was sure of some amounts, but there was still a lot of uncertainty. I was sure of two (larger) informal investors before we started, which gave me the confidence to proceed in the first way.
“Easy access to unique locations worldwide” – Anonymous Investor about Favoroute.com
“I truly believe in this concept, the way Frederieke and her team work and live it!” – Myriam Gijsbers- van Pesch about Favoroute.com
I figure that you really should cover the largest part of the investment before you start a crowdfunding campaign. All the other people who invested, didn’t tell me in advance they would invest and still all turned out to come from my own network. Except four, 32 investors came from my first grade network. An important lesson: I can say that the actual investors are not the people I expected. Shortly, it’s better not to expect anything. At the end, I thought the process was really awesome: each investor (and amount) was a surprise and gave me and the team a boost The investment was a direct prove for their trust in us, Favoroute and our plans for future. It gives us the motivation and confirmation that we need to carry on!
“Promising platform! Frederieke is a ambitious and highly dedicated woman.” – Anonymous Investor about Favoroute.com
“Go for it Frederieke!” – Tom Benner
Interested to join our Favoroute as an investor?
Being part in a next investment as an investor? We are happy to have you on our route!
Please contact me at firstname.lastname@example.org!