Pre-Seed Money via Crowdfunding: A Conversation with PleaseFund.Us’ James Bailey

James Bailey completed his economics degree at Durham University in 2005 and started working in a technical role at data marketing specialist Dunnhumby on the campaigns team. After leaving Dunnhumby, James worked full time on a large property development in Morocco. He approached Tarkan Ahmet with the goal to create the UK’s best crowdfunding platform back in April 2011. Since then, James has been working with Tarkan on growing PleaseFund.Us. They have based the company at their Queens Club, London, office, from where James has been working full time since August 2011.

Sramana Mitra: What is your offering in the domain of crowd funding to fund startup ventures?

James Bailey: PleaseFund.Us is a unique crowdfunding platform in terms of both service and offerings. We have community managers helping project owners to shape their ideas as well as promoting them when they list. In addition, we are the first platform that will be introducing a blended offering for equity and non-equity crowdfunding. This will allow project owners to raise a portion of their funds through a non-equity offering to a wider public, with another tranche of the funding able to be raised through an equity listing that only high net worth individuals and sophisticated investors are able to view.

SM: Are you a for-profit or a nonprofit? What is your business model?

JB: We are a for-profit organization. Our main revenues are derived from our 5% fees taken from successful projects, and from our marketing fees.

SM: How do your investors fund businesses: donation, equity, or debt?

JB: To date, purely gift-in-kind, and donation-based pledges.

SM: Can you describe the psychology of your investor community? Why are they participating in this sort of funding exercise, and what are they looking for?

JB: Our investors are looking to participate in exciting projects. There is an element of patronage in people giving time and money towards projects, but more often than not it is because they want to be a part of something exciting and new.

SM: And the entrepreneurs – what is typically the psychology and stage of the entrepreneurs participating in your community?

JB: Our project owners are often not people whom you would describe as typical entrepreneurs, nor would they want to be described as such. Often they are artists, performers, and innovators who are not looking to make a financial gain. This is important, as making money is not the aim of the platform or the users of the platform. The project owners use the platform to raise the money to help them get their idea off the ground. This could range from a group of artists wanting to put on an exhibition or even a theater production.

We do get business ideas listing; however, to date the majority of the successful projects have been in the creative/arts space.

SM: What are the core benefits that your community offers to the investors?

JB: The community is a way to cherry-pick great ideas out there at a really early stage. Investors and backers can look at thousands of proposals that previously they would never have had the chance to look at, benefit from the crowd’s take on a project, and then make early decisions on whether to be part of a project.

SM: And what are the core benefits to entrepreneurs?

JB: Support, feedback, exposure, funding, and experience!

SM: What is the typical amount entrepreneurs can expect to raise through your community?

JB: Typically we are talking about small amounts of money: £1,000 to £20,000 to get the idea off the ground.

SM: We see a gap in the traditional angel/VC funding industry – they do not accept the dividend model.

JB: The is undoubtedly a gap in the traditional angel/VC model. When you are a young company, the last thing that you want to do is spend your time trying to impress VCs who are interested only in financing deals for £500,000 to £10 million.

SM: The bulk of the early-stage equity financing industry is based on exit-based ROI. Do your investors accept dividends as an ROI model?

JB: Absolutely, the end value of a company is the return that it can generate for a shareholder. If that involves dividend payments, great, if it involves making a trade sale at a higher price, that works as well.

SM: Today’s angel investors have a pretty high bar. Entrepreneurs need validated businesses to raise a seed round. As a result, a pre-seed
gap has opened up, with angels moving downstream. How much risk are your investors willing to take?

JB: Much of the risk is taken out of the system by having an “all or nothing” platform and being able to see what the “crowd” are funding. This means that individually, an investor won’t get burned.

SM: For investors with zero or limited experience of pre-seed/seed investment, what do you do to mitigate their risk? How do you recommend  or help your investors to evaluate deals?

JB: There are always risks, we don’t mitigate them. Investing in early-stage companies carries high risks and high rewards. We are planning on introducing limits on how much an individual is able to invest in any year relative to both their assets and income.

SM: Tell us how to best use your platform. How can entrepreneurs ensure a successful fund-raising round on your platform?

JM: The best bit of advice for raising money on our platform is to spend a good amount of time seeing how other people have raised the money.

SM: Finally, tell us about the geographical scope of your business.

JB: We accept funding [for] projects from all over the world.

SM: Thanks for sharing your story, and good luck to you.

JB: Thank you, my pleasure.

This segment is a part in the series : Pre-Seed Money via Crowdfunding