How to raise £1M in 20 minutes in a record-breaking crowdfund.
Following the announcement of our $2M seed round in Techcrunch (which included the fastest ever £1M raised for a health and wellness company in crowdfunding history), in line with our company values around transparency, I wanted to share the reality.
Any truly well-written post would tease the reader all the way to the end making sure that the story builds and culminates in the epic conclusion you were waiting to hear, but instead I’m going to break convention and start right at the end.
The question is: How did we (Heights — a ‘braincare’ company) raise £1.7M ($2M) in 5 days for our seed round.
The answer: We didn’t.
So, by now you’re angry at me for being misled, but I promised to give an honest account of what it’s been like raising a meaningful seed round in 2020 — and the journey really started in December 2019.
In that context — you might well see that it really took us 12 months, not 5 days… but I’ll explain.
But first — I want to make this content valuable for all sorts of readers — ‘time poor’ is the typical audience but I’m not writing this for them — this is for people who want the detail. Either way, I’ll break convention again and do 3 versions.
For the lazy — 1 minute summary.
For the curious — 3 minute summary.
For the serious — probably more like 10 minutes — but I’m hoping it will be as valuable as possible.
So — just scroll to the section that works for you!
BTW: If you can’t be arsed to read this — I share our crowdfunding story on The Crowdfunding Champions Podcast here.
For the lazy:
Well if you’re so lazy you just want to know in one minute how to do this — then you’ve either smashed this before or aren’t going to replicate it so here’s the summary you deserve:
- Built and failed a startup called Grabble (key point here is not a first-time founder)
- Learned lots of tough lessons (key point — loads of failures & time to reflect)
- Built a network over the last 10 years in the startup scene by paying it forward every time I had the opportunity to
- Launched a newsletter called “Dawn” over 2 years ago — writing science-based tips on nurturing your mental health
- Built a community from that newsletter of people following our journey, caring what we do, and caring about how to improve their wellbeing
- Raised a convertible round
- Found a lead
- Raised a huge chunk before launching crowdfund
- Picked Seedrs
- Planned properly.
- The end.
For the curious:
So, you’re a little more invested in this story but not quite ready for the full version. That’s cool, I feel you. But you still just get bullet points. Just, you know….more. Because really if you only have 3 minutes to hear this story, you don’t deserve any more than extra bullet points!
As I said above:
- Built and failed a startup called Grabble (key point here is not a first-time founder)
- Learned lots of tough lessons (key point — loads of failures & time to reflect)
- Built a network over the last 10 years in the startup scene by paying it forward every time I had the opportunity to
- Launched a newsletter called “Dawn” over 2 years ago — writing science-based tips on nurturing your mental health
- Built a community from that newsletter of people following our journey, caring what we do, and caring about how to improve their wellbeing
BUT THEN……
- We raised a convertible end of 2019
- Pitched well over 500 people this year (about 450 “no”s)
- Found lead investor (Rianta Capital) in May with Forward Partners participating, explaining we wanted to do crowdfunding for the remainder of the round
- Agreed a ‘first close’ for our round of £750k and managed that by end of July
- Spoke to both Crowdcube and Seedrs in August, planned campaign for November for the remainder of the round on the same terms
- Used first close cash for hiring
- Communicated every week in our newsletter “The Sunday Supplement” that we were crowdfunding so pre-register
- 1500 people did
- We loaded the £750k (and by this point another £150k that was waiting to go into the round once it opened) so that we started on £900k — aka very close to our target
For The Serious
So the truth is — raising for startups is hard. I’ve built a network over a LONG time by asking people how I can help them, and 99% of the time, not asked for anything in return.
If you learn ONE thing from this article please make it that — if you give and don’t expect to receive, and you are patient and understand where you want your life to go, and are consistent, generous, passionate, and kind — you might well find that one day it starts to click. And on that road?
Expect loads of bumps, in my case, an epic failure, burnout, full-blown mental health problems — the works. But I never stopped caring about other people and helping them if I could — and even with all that…. This round still pretty much took us a year. So anyway, let’s begin.
November 2019
We raised a convertible of £250,000 which we started raising in November 2019 (pre-launch) and closed in January (post-launch). This was going to be double the amount, but in January the government changed the law on “Advanced Assurance” meaning EIS was only guaranteed if you raised your next round within 6 months — and so Rianta Capital (run by New Look Founder Tom Singh) pulled out.
Whilst this was a punch to the stomach at the time, it turned out to be a blessing in disguise — because Rianta ended up tracking us along our journey and becoming our lead investor in a priced round, which is what we needed for crowdfunding to go well….
This is the money we survived on throughout 2020 (plus revenue).
Strategically, my business partner Joel Freeman and I had decided that we would start raising our seed round earlier than we had in the past, giving us more options and opportunities to find a lead.
We knew we wanted to raise up to £2m to give the company the best chance of success (building a startup is hard, building a category is that bit harder!), and we knew that we would be told “no” a lot because of this ambition (in the UK) — so it made sense to start early.
Given the maturity of the US market towards both mental health and nutrition/nutritional supplements — we decided we would raise half the round in the US, half in the UK.
Fortunately — due to building up a pre-launch waitlist through the newsletter we’d been writing for a whole year on what science says is good for your brain (see this week’s and sign up here please), we’d smashed our launch month with over £30k of sales and £0 on marketing.
Sadly though, as February hit, I was wiped out with COVID (hospitalized, etc — a true early adopter!), and that left us with a 1 man team in Feb with Joel desperately trying to manage the business with half the team down. Feb numbers were OK but it wasn’t ideal timing.
USA Meetings 🇺🇸
As a number of the angel investors in our convertible were high profile entrepreneurs who invested after being our first cohort of customers (founders of Planet Organic, Wetransfer, Shazam, Moonpig, etc), they helped us set up some great high profile meetings against a backdrop of this weird sense of a pandemic growing in intensity.
I’ll save you a long story but I ended up confirming (again) that all my meetings were going to happen the night before my flight, amid my wife freaking out that I really shouldn’t be flying and me explaining how important it was — only to land to have those meetings cancel and suggest we “move to zoom”.
So, jet-lagged — I had those investor meetings on zoom, about 5 miles away from people, which could have just as easily happened in London. Consequently — I flew back home Monday, 72 hours of time and money pretty wasted.
Quarantine
Upon coming home, as was suddenly a new law (great timing) I consequently spent 2 weeks in quarantine in my bedroom. Literally. My wife was vigilant and I had meals brought to my door like a dog with a bowl — not even exaggerating!
The next 2 weeks I tried to follow up with all the US investors at night, spending my day back to back trying to pitch Heights, explaining our vision. My business partner Joel and I realised the truly tragic severity of our timing and had a frank conversation together. With just 2 of us at the time, it was clear that 1 would need to focus full time on business ops, including navigating supply chains in a COVID world and hiring, the other on fundraising full time.
So — my bedroom became my pitch palace. I am not exaggerating at all when I said I made over 500 calls over the next 2 months. Almost all of them were a no. Thankfully — Tom Singh and Ben Betancourt at Rianta who had by now been doing ‘due diligence’ on us for quite a few months, had grown fond of us and decided to lead our round — and despite the lack of options, cards on the table or anything really to push back with, we held out for the target we knew in our hearts we would reach.
The Turning Point
We set out to raise £2m in total (including our convertible) for our seed round, because we had a clear plan and vision for what we would do with it. The benefit of not being first-timers meant we had already experienced EXACTLY what happens when you underfund a crucial stage like seed, and we kept reiterating this story every single time an investor pushed back, told us to just raise £1m and have a much lower valuation.
Instead, we decided that if it took another 500 calls, we would set about our target, clinging on to our plan and vision, giving us enough money to execute what we needed to do, and we were only willing to dilute by 20% — so this became a £2m round at £8m pre, which Rianta, who by now were quite impressed (we think) with our consistency, conviction, and commitment, lead. Forward Partners participated too, and that set the ball rolling. Slowly.
Every single other fund, pre-seed, seed, VCT or any other type of fund turned us down — I literally spoke to every single one you’ve heard of and then used this incredible list set up by Phil Wilkinson, and set up a comms plan in my bedroom to go through every single one that wasn’t B2B. That made about 400 — perhaps 300 of which I hadn’t already tried to get in touch with, and cold emailed. A small handful I managed to get on a call.
Whilst this was going on, Joel was successfully growing the business, and the only non-investor related activity I was getting up to until May was hiring — but by May, we had ourselves a little, but brilliant team.
We also (crucially) agreed with our Lead that if we raised £750K (of the £2m) we would be able to do a ‘first close’ aka put the money in the bank. We had got up to about £650k and hit a brick wall, and now I was going around calling people up for £5 — £10k tickets, pretty desperately. We were slowly dragging ourselves over the line. About 100 calls later, we were there, and it was time to get that money in the bank — this took us to the end of July.
Seedrs Vs Crowdcube
Next it was time to decide how we would complete the round, and pick a crowdfunding partner. We spoke at length to both platforms and in the end the reason we picked Seedrs was their focus on sustainable brands. Whilst it was a fair (and true) part of Crowdcube’s pitch that we were very brand-led and they had a better track record with typical consumer brands — in the hierarchy of things we cared about as a company, being mission-led around sustainability, B Corp values, etc ranked higher and Seedrs ultimately played that card to perfection.
Shortly after quite a long and intense set of conversations with both parties (whose sales teams were incredibly charming, made us feel wanted and refreshingly competitive), they ended up merging anyway so next time that might well be some time saved!
Prep for the campaign
I appreciate it’s taken almost 2000 words to get to the point you care about. Soz. Well — by this point we had £750,000 already lined up as part of the raise, and agreed a date (mid-November) to launch the campaign, and set a ‘target fundraise’ of £1m (even though we could raise up to £1.7M in total), so the plan was to focus on building hype, triggering FOMO and then getting over the line with ‘overfunding’ as quickly as possible.
As such we set about pre-planning investors to join the round through pre-registration from September, meaning that for 2 whole months we teased our deck, talked about the round, our vision, and the campaign to any investors we knew might be interested. I also used my own social channels consistently (particularly Instagram stories and Twitter) to say we would be fundraising and let us know if you would be interested — and managed to get a list of about 200 email addresses interested to learn more simply by repeating the message.
There were 3 core components to our fundraise (other than the overly meticulous due diligence by Seedrs which became pretty boring/frustrating but at least I now know that any statement I ever see anyone make on a Crowdfunding platform has probably had a blacklight for evidence shone on it!
Almost Live
The 3 things we needed were:
- A great deck
- A decent video
- A project plan
A Great Deck
Not to toot our own horn, but our deck really is great. A labour of love from my Co-Founder Joel. He wrote all about it here (you can also see the deck here).
He actively went out of his way to consistently find negative feedback. There was a round of feedback we got at one point where everyone said it was great, until one person (our head of product), essentially said it was great for other brands, but not good enough for us. This was just the kind of feedback we seek in the team, and it took another week of hard work, clarifying our message around ‘braincare’ and thoughtful positioning to really crystallize our vision.
Advice for all founders — doing a deck is a GREAT way to refresh your vision, your ideals, your values, where you’re going and how it’s going. It’s also an amazing opportunity to solicit feedback and I strongly suggest you do what Joel did — keep asking until someone shits all over it, so you know you can do better!
Video
For the video — we used a brilliant agency called Pangea TV (you can email david@pangprod.com) who will happily talk your ear off about the number of times they’ve done a crowdfunding video, how reliable they are, how it’s almost always the same, and how they will work tirelessly until you’re happy. Even though it sounded like one big sales pitch — we decided to choose him and they absolutely delivered on all promises — it was a 10/10 experience.
We did almost pick another agency at double the price and production value — but to be honest, we had an inkling our campaign would go well and I don't like to spend silly money if not necessary so their pitch was the fairest and most convincing.
A project plan
For this, I’ve heard of lots of great companies/services that will manage the entire thing for you — but call us old fashioned, we love to learn how to do new things at Heights so instead, I opted to work with a lady called Hannah Forbes at the Funding Crowd.
She worked with me on an hourly rate and helped me create a plan leading up to both our private and our public launch, and beyond (most of which we never ended up having to use, as we opened and closed the round so fast).
It reminds me of one of my favourite quotes on planning: “The thing about planning is this. The plans? Always useless. But the planning? Invaluable”.
Couldn’t agree more.
You can see our plan here (and if it’s helpful make a copy and use the template yourself)
Pre Launch Registration
Seedrs gave us a great account manager (Clement) and integrated on our slack to make sure we had constant communication with them to leverage their expertise during the campaign. It was finally time to open ‘pre-launch registration’ which we did, initially for one week, but extended it into 2.
We sent an email to our database (at the time about 20k) announcing they could pre-register, and Seedrs did the same to theirs. By the time we closed pre-registration we had about 1,600 people signed up ready to invest in Heights when it went live.
Pre Launch Goes Live
So, this is the bit you’ve been waiting for.
Whilst lining up the email ready to go to our pre-registered investors, this was now the moment to load up the investors that had already invested in our seed round, onto Seedrs.
The thing is — lots of crowdfunds are ‘convertible notes’ into future rounds — but because we had already raised a large part (£750k — which actually ended up being £900k by launch day) of the money, privately, behind the scenes — we were able to include all of that in the round and reflect it fairly and legally — because everyone was getting the same share price, and the same deal.
And so — if you’ve read to this point, you’ve earned the detail here — that £900k was already in, we weren’t allowed to spend it (so thank goodness we had revenue) and we loaded it on to Seedrs (manually by me which was an admin nightmare but needed to be done), and by the time the campaign went live — the 1600 people who saw the email, clicked on to Seedrs and landed on the page could see:
- That it was already at 90% funded of our target
- The investors who were already in were incredibly credible (some of the top entrepreneurs in Europe)
- That if they didn’t act fast, they would miss out.
20 minutes later — the £1M mark was officially reached!
Getting us over the line
We knew that we didn’t really want to push into the public launch for very long (crowdfunding is distracting though great for brand awareness — but the longer it goes on, the more questions you have to ask and ultimately, the more you repeat yourself. It starts to become more time consuming and stops you from executing the business.
We decided to say we were going to ‘overfund to £1.5M’ even though we knew we could go up to £1.7 — and just by saying that, out of nowhere, Chris Smalling (England and ex-Manchester United footballer) got in touch. We explained how fast the round was moving and got a call within 2 days. After one zoom, he declared he wanted to put in £150k, and suddenly we were over the £1.5M.
Suddenly, Seedrs were worried the public would never get a chance to invest (which didn’t look good for them either) so we moved the ‘Live to Public’ deal up a few days and sent that out on Monday (day 5) — and just like that, by the end of the day — the whole amount was taken.
Hype as a strategy
If you’ve learned one thing from this article — hopefully it’s that the success of our campaign came down to a few key factors:
- Raise at least 50% of your “target” amount in advance (in our case, this ended up being 90%, but we set a lower target and overfunding to the full amount — so be tactical! Make sure they know that you will crowdfund for the rest but this is all part of the strategy. We also didn’t take any tickets over £5K in the crowdfund (apart from Chris Smalling, but rules are made to be broken) — so if you wanted to invest meaningfully, you had to do it privately before.
- Don’t be shy. I kept talking about the fact we were going to crowdfund for weeks on end (on my own channels, obviously this wasn’t appropriate chat for ‘braincare’ on our main channels) — but if anyone expects you NOT to shout about your own startup on your social media — they can unfollow!
- Make noise! Once we hit the £1M in 20 minutes — I not only made us all sing and dance about it, but I verified from Seedrs that this was in fact record-breakingly fast (and it was). Suddenly the people who were rolling their eyes at your pathetic desperation have turned into the people waking up and realising that they are missing the boat. I was flooded with messages of people who could have pre-registered at any time, but they chose to ignore my 100 posts saying so. Now they wanted in — and they had to wait til we opened to the public!
- Create clear materials that nail your brand messaging so you don't get many questions.
- Create some rules. We don't send our financials out to anyone — and when anyone said ‘I wouldn’t invest without this’, we said “OK no problem thanks anyway”. Guess what — most of them invested. Know why? FOMO. When people asked too many questions on the forum — we set up one AMA and invited people to it for an hour (that’s all we ended up having to do).
- Hold back news to announce during the campaign. In the end — we didn’t need to do any of that, but we had some we could have. In fact, we grew so fast leading up to the round that we doubled in size (and what better investment story is there than success).
To that point — if you want to see what all the fuss is about with Heights… well, you cant. We’re now sold out (only serving existing customers) and operating a waiting list so unless you put your name on it, you won't be getting our premium braincare packages through the letterbox in 2021 either.
The hype is real, and so is the FOMO.
If this post has actually helped or inspired you — take it from me, there’s no better way on earth to say thanks than by trying our product and becoming a customer! REAL TALK. 😍
Can’t do that? Well follow us @yourheights and me @danmurrayserter on twitter and instagram at least then!
Thanks so much for reading this mammoth essay. The point was to try and answer as many of the questions I’ve received in my DMs about how we did it but also to say this.
Startups are F*CKING hard. I have one of Europe’s top business podcasts (Secret Leaders), have a decent network I’ve built up over years (from helping people and paying it forward), and yet, 2020 — we almost died. And we heard ‘no’ hundreds of times. And in the end — £1.7M in 5 days was more like in 12 months, with a ton of hard work and hustle behind it. All worth it.
So — don’t believe everything you read, but if you’re building something meaningful that you’re passionate about, and you’re willing to be patient, solicit honest feedback, and turn up every day with the same enthusiasm like I did in my bedroom/office in quarantine after endless rejections and still talk about the vision for your company & how you need to exist for your customers — well, you might stand a chance too!
Good luck.
PS: Remember the truth behind the glossy scenes….
