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Crowdfunding: the financing of the future?

03 Dec 2018

News Crowdfunding: the financing of the future?
Will this be a new financing model in the future? What solution is his that seems to be thriving startups? The answers are not this simple but examples are growing day by day. In Portugal, the number of businesses that engage funding rounds, both in early stages as more mature periods, are increasing. Some cases successfully, others not so much. APICCAPS’ newspaper got to know successful stories within the footwear sector.

Firstly, let’s demystify a few concepts. What is crowdfunding? According to an article from E-Konomista, “crowdfunding is a simple collaborative funding system, mainly disseminated on the Internet, which consists in a type of investment where several people anonymously contribute with small amounts of money to a product or idea”.

A virtue about this type of service, according to INLU’S CEO, Inês Lebre, is the market’s quick response and the fact that crowdfunding platforms are, by itself, a way of promoting the brand. INLU was created in 2017, by Inês Lebre. With a background in management and while working in the consulting area, Inês decided it was time to invest in her own business, also including her strong environmental concerns. INLU emerged when she met her partner.

On October 11 this year, the brand started its first investment funding on Kickstarter. Its goal was accomplished within just six days. The first round gathered 26 thousand dollars, being the majority of it orders. “There are several types of platforms with different types of fund-raising. We wanted to focus exclusively on pre-ordering of our shoes, therefore the raised amount stands for orders”.
In six months, INLU shoes will be flying to the four corners of the world. For now, the brand doesn’t want to go back to this platform. The idea for the next collection is to enter the traditional channels. “Being on this platform was a kind of kick-off”. However, Inês Lebre acknowledges the importance of this type of funding in starting companies. “One of the crowdfunding benefits is that it can be used in a starting company like INLU or in an already consolidated one”. Which is the case of Undandy. The national brand that allows the customer to create its shoe from soles to laces. The brand recently joined Crowdcube and became the first Portuguese startup on this platform.
The company held by Rafic Daud had the goal of reaching the 1 million dollars for 8.77% of capital. The goal was accomplished in a short period of time. Overall, according to the available data on the platform, the campaign – which is ongoing until December – has already gathered 150 investors.

 Undandy is dedicated to customizable footwear, has sold over 22 thousand pairs of shoes within three years and received international coverage. The company’s aim is to become the “ultimate brand of customizable footwear”. Between 2017 and 2018, Undandy’s sales increased from 300 to 2000 pairs of shoes per month and reached number the 20 thousand clients from 130 countries.
“We gave grown a lot in the last three year and, now, we hope Undandy becomes a highly lucrative company, not just sustainable. The biggest limitation so far has been the production capacity. However, during this period, we’ve also been able to identify the areas where we can improve significantly”, stated Rafic Daud, the CEO and Co-founder of Undandy.

How to have a good crowdfunding campaign?
We asked for some advice on how to have a good crowdfunding campaign. According to Inês Lebre, when a company decides to start a campaign, “it should realize it starts around two months before it is officially launched”. The preparation work is huge and can either guarantee the success or the failure of the campaign. To Inês, these are the essential ingredients:
•    Great storytelling. It is absolutely necessary to have a story to tell. Only that way a brand will be able to attract potential clients;
•    Who are the faces behind the brands? From the point of view of INLU’s CEO, this is a key point. “People are increasingly buying the products due to their stories, not just by the act of buying the product itself. There’s a major interest in knowing who are the people behind the products, who produces them, who designs them, the faces behind it all… And that’s what we did at INLU”;
•    Invest in digital marketing. It is more than crucial to generate leads in the period before launching. A brand has to create some suspense that arouses curiosity;
•    Great film;
•    Great pictures;
•    Promotion in the specialized press.