I arrived back in Australia yesterday, and spent today at a crowdfunding class sponsored by The Mill House Ventures. They are a local social-enterprise incubator in my hometown. The presenter was the CEO from Start Some Good which is a crowdfunding platform specifically for social-enterprises.
I’ve been considering crowdfunding as a funding option for a while, and it’s not just about raising money. My two major reasons are:
- It could validate the market value of my product ideas which will also increase the value of my business; and
- It could fund my first mould without having to give away any equity.
The second reason is more important than the first to me as giving away too much equity too early to investors could jeopardise the social mission of the company. I can already hear them asking me why should we make these products from recycled plastic in Australia when it’s cheaper to use virgin plastic in China.
This is something that people have already warned me about as the rights of shareholders apparently overrides any social mission even if I’ve written it into the Constitution.
I considered a not-for-profit model too, but it really limits the ability to raise funds from outsiders. Furthermore, because we are focussed on selling consumer products to achieve our social mission, the business lends itself naturally to a for-profit structure.
After taking the class today, I’m convinced that this is the right way to go for one of my products in particular. It fits the criteria well, and essentially sets me up to pre-sale products before investing further into the moulds. Plus, if I get accepted into the Mill House program, they’ll give me resources and a little bit of marketing money to increase my chances of success.
After the class, I ran into the manager of the local innovation grant which I looked at earlier. I asked him if it would jeopardise my chances of getting the grant if I received a little money for the crowdfunding campaign. He said it might actually increase my chances because it validates that someone else thinks I have a good idea.
With that info, I now have about two weeks to submit my application for both the crowdfunding program and the grant. I just need the final numbers from my manufacturer so I know how much money I need. That meeting will occur on Wednesday next week when I fly up to Brisbane.