is a financial information aggregator, providing investors with news, analytics and insights. To date, CityFALCON have raised nearly £2m through equity crowdfunding across four Seedrs campaigns.
We caught up with Founder & CEO, Ruzbeh Bacha to find out more about their equity crowdfunding success.
What attracted you to equity crowdfunding?
Our overarching mission is to democratise access to financial content for all market participants, regardless of how deep their pockets are. Equity crowdfunding is a very similar idea, except for access to the capital in capital markets instead of access to the data for capital markets. Thus the idea of ECF aligns with our own mission.
Moreover, we have an alignment in the target audience – people who invest on Seedrs can also use our products – so we have users and investors who may become brand ambassadors and potentially open up leads to enterprise clients.
Aside from capital, how has your company benefited from crowdfunding?
Many of our users are also investors and vice versa, and we get a wealth of feedback from them concerning the product and implementation. They have money at risk, so they want us to succeed, too, and that means they provide frequent and, importantly, candid feedback.
With over 1200 investors over four rounds, some returnees, we have also been able to build up our network. Naturally, you can still build a network through traditional equity raise channels, but ECF allows the network to be cast to a much wider net of potential contacts and across the EU.
Were there any resources or external support services you used for any of your campaigns?
Unfortunately, no book or resource can help you learn how to raise money. It’s by actual implementation that you learn.
We did however, leverage the Seedrs Bitesize pitch event, which I believe is the best pitch event in the UK, with money flowing into the campaign immediately. We also organised our own investor event with the support of Seedrs.
What do you think has been the key to your crowdfunding success?
A strong product and a strong track record of transparency. We’ve written about trick companies play on would-be investors
, and we avoid them. We very clearly explain how we arrived at the valuation we did
, and this greatly builds trust among investors, which has certainly helped gain positive feedback on Seedrs forums. This has also very likely brought some previous investors back for later rounds. We also focus on raising the stock price, not just the valuation, so we can capture better talent with stock options and keep investors happy. That translates into better product, which keeps customers happy, which increases valuation. And the cycle continues to build up the company.
Finally, we understand the state of the capital market in the UK and the realities of raising money
here, including the need for relationships, luck, and an element of FOMO. Realising the importance of just these three points and understanding the market helped us overcome longer odds than we would have faced in Silicon Alley or Silicon Valley.
Do you have any top tips to share with the community?
Be transparent and include your failures along with your successes. Investors have to trust you. Also, spend at least a couple months planning your campaign and getting some money to back it so you can hit the ground running when the campaign launches. Few people want to invest in something that has been stalled at 15% of the funding target for a week. Which is also why you should pick your valuation wisely. Sky-high valuations look nice, but if you don’t have anything to back it up, the money will be reluctant to come. Conversely, as you build up relationships and investors see progress, more money will come, raising the valuation for concrete reasons and bringing you to profitability. So much money backs later-stage startups because progress and relationships are already in place, but when you first start out, you won’t have those yet.