Interview: Crowdfunding Platform FundedByMe

You can start a project or you can start a company. FundedByMe is a place where entrepreneurs have a chance to find money for their projects, meet the right people and learn how to shape success for their campaign.

FundedByMe is a crowdfunding platform that offers both reward-based and equity funding. Started in 2011, it is one of the top 3 European companies to offer equity crowdfunding. It facilitates cross border investments and offers a great opportunity for entrepreneurs to expose their products and get essential results.

We couldn’t miss a chance to interview a cofounder of the platform, Arno Smit who gave us the answers to the most interesting questions. Check out how successful companies get started and what incentives you can get out of a crowd.

FundedByMe team

Me: To start with, since everything starts with an idea. What gave a nudge for FundedByMe? And why crowdfunding?

Arno: FundedByMe was started due to frustration of not having access to tools. We had an idea that was initially called “Ideas for change” which was basically similar to idea. What we wanted to do was essentially reach out to people and try to connect them so that they could share ideas, do a collaborative thing and eventually crowdsource it.

We started going through the whole process of looking for some sort of investment or raise the capital in order to get us off the ground. So we found out about Kickstarter and approached them. At that stage they replied: “We are close to the US citizens and US borders and we don’t think that it’s valuable for the US community”. We felt frustrated about it and came up with an idea: “Okay, if we are 2 people sitting in Europe who don’t have access to these tools, why don’t we go out and build it”. So we put up a basic page and connected it to Paypal button to see how this goes. In 3o days we raised 12-13 thousand Euros - not a lot of money for someone who wants to start the company off the ground but a good motivation to move ahead with.

We took that money, reinvested it into the platform and in 30 days launched the platform. Since then we have been growing a little bit organic. We had about 850 reward-based projects. Then people would come to us saying it was really good that we provided them with the ability to fund projects and ideas, but there is no mutual connecting point where you could take investors and have a meeting place, kind of like present the company online.

We started researching this and got a lot of feedback by meeting entrepreneurs. In 2012 we launched equity crowdfunding, which came as an addition. Since then we’ve been focusing on making the platform a lot better and helping people out with it. The first equity campaign closed last year, January. They managed to raise 120 thousand Euros.

Since then we’ve helped about 18 companies raise more than 3,2 million Euros.

Read also:How much to develop an app

Me: From The Huffington Post: “To test the platform they'd built, FundedByMe put their own company on their own platform, opening up 10 percent of it to investments, and made over $1 million in no time.” What is your secret?

Arno: The secret is preparation. No company starts without a great deal of preparation. A lot of entrepreneurs give themselves a space between 2 to 3 months to come up with a really good hitch.

We’ve built a lot of analytical tools and see what works best. Video, for example, converts a lot higher than images do. In order to have a successful round, we urge entrepreneurs to have a video as people are more likely to click on it and you can get better engagement. We have a really good knowledge base and share this information with people, work constantly on events, try to promote our success stories.

Having worked with investors we understand what they want and whether they are looking in terms of companies or in terms of rounds. Why would someone put down a million crowns if there is no such a thing like a marketing plan or you are not displaying your team?

The other part of it is when someone does think about putting money into the company, it’s not just about the company itself but about the people behind the company. So when they see, that you have a really good quality team even if the business model is not solid right now, they know, that eventually you will find an angle on how to monetize it.

Me: FundedByMe offers both reward-based and equity crowdfunding. Which one is more popular among investors?

Arno: At this stage they are equal. But since adding equity to the equation things have really taken off. There is a potential for reward-based crowdfunding though. The only thing, that we as a company are struggling with is the fact, that all of the decent payment providers are based in the US. It’s only now, that some of them are starting to break borders into Europe. That’s a little bit of a killer at this stage because there are some payment issues as the payment process is not the best, the documentation is not set up good enough yet.


Me: Have you had cases when investors got nothing in exchange to their money except the feeling that they did something worthwhile?

Arno: Yeah we have. When you start a business you want to get as much traffic and as many things going on as possible. So we’ve had charitable courses where people just donated money and didn’t expect anything in return. They’ve gone extremely well. I am talking about thousands of visitors, who came through and donated money.

When we first started a reward-based crowdfunding, we would get charity campaigns align with those, who wanted to fund the next app idea. But what we got was a back-clutch of people coming to us saying: “How can I compare putting my app idea next to a dying kid?”. It just didn’t make sense.

In order to move forward we had to decide what we wanted to do. Just do charitable courses or do something really good in the entrepreneurial scene and help companies by providing them with a place, where they could find mentorships, advisers, enlist their idea and make that a reality.

Me: With constantly growing competition it must be hard to win the race. From your point of view what should entrepreneurs pay most attention to when trying to meet the funding goal?

Arno: Preparation is everything, how they pitch the company, how they put the message across, so people get it very quickly. There is a thing called "elevator pitch", which is just 30 seconds to pitch someone’s imagination. You should say who is the team, why you are going to be successful and also answer 4 basic things : what is it about, what is involved, when can I see the return of investment and why should I invest .

Me: Having a strong focus on Europe for the time being I wonder what is ahead for FundedByMe? Is becoming the next Kickstarter in your scope of ambitions?

Arno: YES! As a cofounder and a person inside of a company you need to always set goals and even a vision or a mission which is almost unattainable. So we are seeing ourselves as... I wouldn’t say the next Kickstarter, but a variation of it.

Kickstarter has shown something fantastic - the fact that they can build a community around people, who are coming back and supporting companies or projects over and over again. What we are looking at essentially is doing the same, but for the early stage finance, not just kind of like pre-ordering a watch, but really becoming part of a watch company and being there for the first, the second round, the exit and even maybe the failure. It is a high risk investment and we always say that to people but it’s also something extremely exciting. It’s not like investing onto the stock market any more, because you are already too late, you can only buy a small amount of shares. But here you have the possibility to discover something great.

Me: What are the best success stories you can relate to?

Arno: Our first company, that came online, was the company called Virtuous Vodka. Those guys have done something amazing. The founder has always had this idea of being real, not being fake. He wanted to start this brand of everything, which is ecological, not artificially flavored and he did that. They came to us when we were very early and launched their campaign. In less than 8 weeks they raised a million Swedish crowns.

The biggest thing is Sweden is that all the liquor store are run by the government.  It is extremely difficult to get listed on their choice of items, which are available. What did this guy do? He took 103 investors and used them as a marketing engine. So all those people went to the local bars and pubs and started talking about this brand saying: “Why don’t you guys have this vodka? I heard it’s extremely good!” So it started creating a buzz, which led to a lot of demand. Through this demand 6 months later those guys got listed on the government list of entities among the companies, that sell alcohol. In one year they raised investment, managed to get their brand onto the market and started exporting.

Another success story is the one of Flippin’ Burgers, which is an example of a reward-based crowdfunding. These guys came to us and said: “We need like a million Swedish crowns”. We answered: “It’s not gonna happen at all”. The guy had a much lower goal and said: “What I’m gonna do is make hamburgers as I am a hamburger enthusiast.” So he just started selling pre-ordered hamburgers online. It was a “buy one - get one free” deal when the place opens up. A year and a half later every single night you go to that place, there is at least like an hour queue to get inside.

I am extremely proud of these two, because this is something, which is very easy to understand. You want to start a hamburger company? How can you engage hamburger enthusiasts?

The other one is what the real value of choosing equity crowdfunding versus angel investment is. Had they gone to 2 angel investors they might not have had that marketing engine of going out every weekend and telling people about the brand. Now they have 103 people they can turn to and ask for help. That way they created a massive movement behind it.

FundedByMe Arno Smit

Me: On your website : “We talk about the campaigns on our platform to investors - big and small - and will also bring key campaigners along to relevant events and potential investor meetings.” Could you tell a bit more about investor meetings and events? Do you organize any meetups?

Arno: Last year we did a few for entrepreneurs and some that were more towards investors. Investors’ events work pretty well. We have one or two campaigns, that come and picture themselves in front of the audience. The return for them would be some sort of investment.

As long as the entrepreneurs have shown an interest to be on FundedByMe and at the pre-round phase, we will provide them with investor meetups. Also we do some analytical review on them in terms of how many people got interested in the company, how much traffic they have driven. One thing we don’t want to have is lazy entrepreneurs. As a lot of attention is going into details, and you can’t come to an investor meeting when you are unprepared.

Read also:Interview with RevRise

 Me: Apart from both Reward-based and Equity crowdfunding options what else differs FundedByMe from other successful crowdfunding platforms?

Arno: It’s quite a good question. There are a lot of crowdfunding platforms that are actually startups. In Europe we are seen as one of the top 3 companies in terms of equity investments. The fact that we do support both types of crowdfunding gives us a very good competitive edge. The other thing is that we started to open up local entities, which work very well as trusting factors. You can just go there and ask how to reach local investors and markets.

Me: What is the most complicated thing you have to deal with in your work?

Arno: It’s legal questions. Equity crowdfunding is new and includes certain things you are not allowed to say as a provider. For instance, you can’t give anyone recommendations about how much the company is worth. We are also not allowed to publicly display financial information when the round is ongoing. This is a bit of a bottleneck for us.

Me: FundedByMe was started in 2011 and now you have offices in 6 European countries. This is really impressive minding such a short period. How do you deal with finding investors from all over the globe?

Arno: It is not difficult to find investors, they find us. We have a large investor base. 95% of 18 companies being listed on FundedByMe have successfully gone through the process of closing money and found investors from abroad. FundedByMe has started to facilitate cross border investments. We are just about to start off an office in Italy. Singapore is coming very soon and the same thing with Germany.

We give people 4 to 6 month to get the company out running. Equity crowdfunding is a new phenomenon and not many people understand why there is a value of having a thousand venture investors versus 2 angel investors. There is an educational gap that we are bridging at this stage by having local country managers. The first thing that we let them do is go out to their extended network, put together a few investor breakfasts, get a case that would be really good for Equity crowdfunding and essentially start filtering a couple of investors through it.

Me: The most common word-combination that comes into mind when you hear the word "crowdfunding" is raising money, but it seems like money is not the only reason for this type of investment. After all, what is crowdfunding all about?

Arno: I always say to people that money is on one of the positive side effects when it comes to crowdfunding. It’s a good idea to have in mind. But when you look at some successful startups it’s not only about the money for them but about the connection, that they didn’t know existed, the tools they didn’t know they had available.

It’s more about opening doors or finding the right mentor to get you into the place where you want to be. This is where I go back to mine and Daniel’s situation. A year and a half ago we were 3 people in the company and now we are 20. There is a huge curve where you get to learn a lot of things, you hire people a lot smarter than you at the end of the day. Those people get you into another way of thinking, put you in positions where you think a lot different about the business. And this is essentially what it’s all about.

FundedByMe is where entrepreneurs and investors meet and what you get out of it. On the positive side it is funding, and on the better side it’s mentorships, guiding you into the process of taking the idea into reality, growth stage and exit eventually.

We are thankful to Arno for giving us such a great interview!

Arno Smit FundedByMe

Arno Smit

Co-founder and Chief Technology Officer at FundedByMe


3.0/ 5.0
Article rating
Remember those Facebook reactions? Well, we aren't Facebook but we love reactions too. They can give us valuable insights on how to improve what we're doing. Would you tell us how you feel about this article?

We use cookies to personalize our service and to improve your experience on the website and its subdomains. We also use this information for analytics.

More info