How to raise a million euros in 96 seconds

Being a B2C firm, having a previous list of interested investors or offering a brand new product on the market are some of the keys to more easily closing a funding round

Monzo obtained over a million euros in 96 seconds though crowdfunding
Monzo obtained over a million euros in 96 seconds though crowdfunding
Aida Corón / Translation: Neil Stokes
Barcelona
30 de Maig de 2018

Is it possible to close a funding round in only 96 seconds and for quite a substantial amount? Monzo has shown it is. In 2016, this British startup raised a million pounds, the equivalent of about 1.1 million euros, in record time. The money was raised through a crowdfunding campaign with Crowdcube and has become the fastest funding round in history.

“They made a lot of noise and that’s why they did it in such a short time,” says the head of business development for the platform in southern Europe, Azahara García, about something that caused quite a buzz at BizBarcelona. The company was aiming to raise six million and their business model already had the backing of the venture capital fund, Passion Capital, from whom the entrepreneurs accepted five million, leaving the other million to their community. “They had to be new clients coming in so as to make them feel valued, to show them that we wanted them to become part of our shareholder base,” says the Crowdcube representative.

The next rounds followed the same dynamic: a main allocation of funding, and then a contribution from the community. They have already raised six million euros through crowdfunding in three separate injections of capital and always for figures of between a million euros and almost three million, something that has brought them almost 7,000 investors.

User, client, partner all at the same time

Monzo is a fintech startup, like Loanbook and Bnext, two other projects that increased their resources through Crowdcube. This is one of the factors that García says was a key to success: “They already have a community with an investing profile behind them. It is not the same as with a retail company, which might have more customers, but which is not used to investing.”

The initial launch by the Catalan firm, Loanbook, was done between their community and later resorting to Crowdcube, where they raised 400,000 euros in  24 hours, “one of the biggest funding rounds in Spain,” according to García. Between both sides, they finally managed to raise 750,000 euros in only three days.

García: "Loanbook had a reputation and took advantage of it, which is why it closed rounds with bigger investors and tickets”

For the expert, their secret “was getting the most out of those who had confidence in them.” “Monzo had not been operating for long and they presented themselves as innovators. Loanbook did have a reputation and took advantage of it, which is why it closed rounds with bigger investors and tickets,” she adds.

In the case of the Madrid firm, Bnext, they raised 300,000 euros, also in a single day. They even ended up with a waiting list of investors who arrived too late. “They conducted a really good pre-round,” recalls García, “normally a mailing campaign to contacts is launched and they did this well, they created expectation around the operation.” And they knew how to set a figure, she says, “one attractive enough to draw people into what was a very young company, so that the Crowdcube community did not want to miss out and signed up to the waiting list.” It was something that made a second round just about inevitable.

Newly-discovered market niches

Another historic figure was raised by Glassy. The social app and wearable used for monitoring athletic performance raised almost 350,000 euros with Startupxplore in two hours with a top investor: Aggeris Venture Capital. The success, according to sources at the Valencian platform that funds startups, was “the great attraction of the market and a product that is tangible and easy to understand.”

It is a characteristic that is shared by Comprea: “Their commercial margin was very low, but the market had potential.” And they point to the team behind the project, “a group of professionals that created a product that stood out from their average competitor.” Their success was raising 300,000 euros in 50 minutes and getting some 30 investors with Startupxplore. This app, which selects shoppers to do the shopping for users and deliver it to their houses, was acquired by Lola Market.

Less time does not mean less quality

The Crowd Angel’s private ranking is the following:

They are exceptional cases and that is what the platform’s CEO, Ramon Saltor, prefers, saying that “obtaining funding very quickly is double-edged blade.” “Normally these exceptional cases manage it because before they send out an ad to possible investors, there are those looking out for when it opens so as to publicise it. Think that merely opening the information, reading it and making a contribution takes more than 96 seconds, as happened with Monzo,” he adds. This idea is not meant to take anything away from operations carried out by other companies, but it makes the point that it is the result of work done before the funding round begins. "A licit action," he points out, "many companies do it to guarantee the operation."

Saltor: “The investor needs a few days to look at it and decide if it is viable"

At The Crowd Angel they are used to working with campaigns that on average last 21 days to raise the desired amount, which shows that those people interested in taking part first look carefully at the material. “The investor needs a few days to look at it and decide if it is viable. Our tickets start at 3,000 euros and can go as high as 20,000 euros. With these amounts, no one will invest without looking at it carefully,” he says.

Yet, there are cases like those of Boxmotion or Stayforlong, who Saltor says “were in great demand by investors” and that this endangered the platform’s ability to finally take part in expanding the capital. Or like Hutoma, “with state-of-the-art bot technology and aimed at certain profiles.” What’s more, he recalls that they had also received a lot of recognition at the Mobile World Congress, which put them in an enviable position in relation to potential investors.

It is also worth mentioning Yugo, a company that rents out scooters: “it is a very hot sector. We don’t need to explain what the company does when it goes public, people already know. Their metrics were good and as a good B2C firm they had a network of big users ready to put money in.” And as Saltor recalls, their investors contributed with a professional mentality and with the aim of having a portfolio of shares.