Crowdfunding Keys to Success: Get People Involved Personally
Sam O’Connor did not set out to transform the world of auditing, but that is exactly what he wound up doing.
O’Connor graduated from Kingston University with a Bachelor of Arts in Business Management, and later joined the Institute of Chartered Accountants in England and Wales.
His first job was as a senior associate auditor with PwC, and then he moved on to become a commercial finance manager with Virgin Media, where he worked nights while he and a partner built their first business, ProConfirm, which launched in 2012. ProConfirm was created to make audit confirmations faster and safer, as O’Connor told me during an episode for my podcast, Back Yourself, and the venture was good enough that the company was acquired by Confirmation in 2014.
O'Connor went on to work for Confirmation for nearly two years as the company’s commercial director for Europe before leaving that to become an advisor at Intruder, a small cybersecurity company that finds network weaknesses before hackers do. He was a mentor at CyLon and Level39 before joining Techstars in 2017, which led to the launch of Coconut.
Coconut is bookkeeping and tax services for sole traders, and the company’s goal is making self employment easier than being employed. The company launched in 2016 and works mainly by connecting to your bank account so you can track income, claim expenses, and work out how much tax self-employed workers will owe.
ProConfirm’s Breakthrough Moment: Getting Banks on Board
ProConfirm had a problem to solve and a way to solve it, but did not have a market. The critical success factor was getting banks to use their system so auditors could make requests from them and they could respond. But both banks and auditors have sales cycles measured in years, meaning their opportunities for moving the business ahead were slim.
O’Connor was able to generate momentum with banks by beginning with the smaller ones. There was little money in it, but the process was easier, and by consistently signing smaller banks he was able to show momentum to the larger banks in a process he called “land and expand.”
Who to land? Bank officials who are hungry for affirmation and open to new ideas. Long-term bank employees are too comfortable in their jobs, while those whose LinkedIn profiles show they hop between banks and positions are eager to get ahead and willing to look at new ways to do it — possibly including your crazy idea.
Crowdfunding When You’ve Invested Very Little
When creating Coconut, O’Connor and his team eventually generated a mailing list of around 12,000 and used that to launch his crowdfunding efforts. He started a Facebook group built around the problems of people who were self employed and found it tough to win clients, handle admin, get the kids off to school, and keep a handle on their taxes at the same time.
“We started engaging, and people started engaging back,” he said.
That engagement generated feedback, and events and get-togethers helped launch the initiative. A kickoff event spread the word and helped to win future customers and crowdfund at the same time. But accounting is inherently complicated, and there is a large foundation that any founder must build before he or she can even think about getting off the ground.
“That crowdfund enabled us to get those bedrock features built,” he said. With open banking, Coconut could increase its market reach from a healthy 200,000 to an astounding 5 million — all the people in the U.K. who were in desperate need of the tools Coconut was selling. And that fueled another round of fundraising.
“It feels like the gears have shifted,” he said.
Top Tips for Crowdfunding
Crowdfunding, O’Connor says, is extraordinarily hard, but there is one key to success: Get people involved. The more people who know about your venture and are backing it, the easier word will spread and the more community traction you will get.
“The biggest success stories are where you bring the community to the table and you get everyone pumped about what you are doing and they invest in you,” he said. “If you are building a business, get a community around it and engage with people to find the people who are the most excited about what you are doing and build a relationship with them. Get to know them by name, invite them to events and those form the core of your support.”
And that support will expand as those people promote what you are doing to their friends.
O'Connor found success in business through connections and perseverance. He learned the value of building a community around your product or solution then activating that community to support your venture. Coconut has been a resounding success, and it will be interesting to see what comes next.