Smallbrooks blog

Crowdfunding squared: Why we're crowdfunding ourselves

By Lennie Marie Olsen

Let’s admit it: we’re pretty nuts about crowdfunding. You might even call us crowdfunding geeks – you wouldn’t be the first. Having started our own crowdlending platform, lendino.dk, 8 years ago, we have basically been living and breathing crowdfunding ever since.

Five years ago we branched out to also build platforms for other companies, widening our focus to all types of crowdfunding, not just crowdlending.

This is why we are currently crowdfunding ourselves for the second time using the equity crowdfunding platform Funderbeam.

We think it makes sense to practice what we preach and try crowdfunding from the other side of the table: as a project owner.

Why use equity crowdfunding?

Equity crowdfunding is a way to raise money from a lot of people rather than a few. Investing in – and thereby potentially profiting from – startups and small businesses like ours have previously only been available to business angels, venture capitalists and other institutional and wealthy investors.

With equity crowdfunding it becomes possible for ordinary people to invest in startups that aren’t yet ready to go public. Giving investment opportunities to ordinary people and thereby democratising this part of the financial sector is something we really like.

Using crowdfunding rather than just getting money from investment funds and other professional investors (which we have also done) also helps us as a company in other ways.

Besides money we get exposure and visibility in front of a large group of people who otherwise might never have heard of us. Perhaps somebody reading about our crowdfunding on LinkedIn or in an article actually works for a company that needs a crowdfunding platform! 

In the same vein, our investors on Funderbeam become ambassadors of our brand and can potentially help us find new customers. Expanding our network is always a great idea.

Finally, we chose to use equity crowdfunding to get a feel for what it’s like to be on the other side of the table and be a project owner. We know a lot about how to run a crowdfunding platform.

We also know what a crowdfunding backer and investor wants (our founders and most of our staff invest regularly in crowdlending or support reward crowdfunding projects – did we mention that we are a bit geeky about crowdfunding?).

We even know and advise project owners on what it takes to run a successful campaign, but it’s rare that we get to put our theory into practice. Ultimately this knowledge will help us build even better platforms in the future.

Why Funderbeam?

Funderbeam logo

When deciding to raise money through crowdfunding, we also had to decide how to do it. 

One option was to simply do it ourselves: Send out a call to our large network of lenders, borrowers, customers, ambassadors, and business partners and ask them if they would like to own some shares in our company. We could even manage large parts of it through our own platform – this is, after all, what we do.

However, selling shares in your company is complex, expensive, and time consuming. We therefore quickly decided to go with option two and use an actual equity crowdfunding platform.

The decision to choose Funderbeam this time was easy. We already raised money on their platform back in 2019, so we know the people and the platform – and they know us. A couple of the things that attracted us to Funderbeam three years ago still applies:

Danish representatives

Funderbeam has a branch in Denmark, so we have been able to talk to Danish-speaking employees who understand the Danish market. On a practical level this proved especially useful last time, as they could help the compliance department (based in Estonia) read the uploaded identity papers for a smoother onboarding of Danish investors.

 

Existing crowd

While most of our investors both last time and in this campaign are – so far – Danish, we really appreciate the chance to show our case to Funderbeam’s existing crowd. Especially as we are about to start selling in Europe, having our idea, product and brand presented to an international crowd is pretty awesome.

 

Secondary market

Finally, the fact that Funderbeam has its own secondary market is a major reason why we chose them instead of doing everything ourselves. Being able to easily sell your shares is a great service to offer our investors, and the fact that they can do this without involving us is just a bonus. Had we funded ourselves, we would have to manually update our list of owners, every time a trade was made – the administration of that would quickly annoy us. 

What’s next?

Our campaign just went public, so for the next month we will be talking a lot about our crowdfunding project and what the future holds for Smallbrooks. 

In short the plan is, well, more crowdfunding of course.

 

Expanding internationally

Smallbrooks started out as a bit of an experiment, spurred by a conversation we had with our first customer Coop. They wanted to create a crowdfunding platform to engage their members and asked us to build it for them. The result was Coop Crowdfunding. The concept took off, and we figured that other organisations wanted to do the same. We were right.

After building several platforms within the borders of Denmark, we now feel it’s time to bring Smallbrooks to other European countries. While crowdfunding is popular here at home, there are many places where it’s not a novel concept but instead quite integrated into the financial ecosystem. That is going to be pretty exciting to explore.

Customer experience

Next up on our to-do list is to expand what we do. While we are pretty nerdy about crowdfunding, many people – inexplicably – are not. Running a crowdfunding platform can be complicated, but we want to make it as simple as possible. 

All of our customers are fully onboard with the why of getting the platform. However the how is often a different question entirely. This is where we want to take our game to the next level and provide a smoother and simpler customer experience. While the software will always be our key product, we want to increasingly focus on educating our clients in how to run a crowdfunding platform in order to make their platforms as successful as possible. 

If they win, we win.

If you would like to learn more about Smallbrooks and our Funderbeam campaign, you can go check out our pitch page here.