Belfast-based food technology pioneers Carritech Research launched their equity crowdfunding campaign to raise £350,000 on Seedrs on the 29th March 2016. Their Managing Director Dr Richard Horton talks to us about their reasons for crowdfunding and his experience so far...
Why did you choose equity crowdfunding to raise funds?
Carritech Research and our ColdBake technology are all about making good nutrition and medical foods enjoyable. The people who generally speaking are most interested in what we are doing, and indeed passionate about good nutrition and preventative health, are consumers. So even though our business model is B2B, we were keen to reach out to consumers, and offer them an opportunity to participate in a business that is aiming to do things that are ultimately for their benefit. Equity crowdfunding provides a very convenient mechanism for doing this.
Another reason for choosing equity crowdfunding is that the terms of investment and the legals are sorted out at the beginning of the process. So for example the thorny issue of valuation is dealt with up-front. This is great from the perspective of the entrepreneur, because it potentially saves a lot of time that would otherwise be spent to-ing and fro-ing over what terms and conditions are fair and reasonable. So it means we can spend more time on doing what we’re good at. It’s also great for most investors, because they too can see straightaway what the deal is. And there’s the advantage that the entrepreneur and the investor get to use the tried and tested ‘honest broker’ legals drawn up by the crowdfunding organisation, in our case Seedrs.
What did the application with Seedrs entail and how long did it take?
The Seedrs application process was clear and straightforward. Their web site contains almost all the information we needed to prepare the application, and we received helpful guidance and quick answers to our questions from the Seedrs team. We already had a business plan written before we began, so we were able to use parts of it to fill out the sections of the application. The first draft only took a few hours, and over the next few days we spent a few more hours editing it. We then submitted it to Seedrs to review. They came back to us within a day or two with some helpful comments and suggested improvements.
What took rather longer – say a week or two - was pulling together and submitting the supporting evidence that Seedrs then called for. They came up with quite a long list of questions; some calling for us to back up with hard evidence claims we were making in the application, for example about what our technology is able to do; and some questions calling for background information about the company and our team members. All of the questions were perfectly reasonable, and the sort of ‘due diligence’ I would expect of a professional intermediary that is looking to protect the interests of investors, and to preserve and enhance its own reputation.
How much time did you spend planning your crowdfunding campaign and how did you market it ahead of the pitch launch date?
Allowing for the Christmas and New Year break, it took us just over a month between submitting the pitch for review and making it available for private viewing. We then spent another couple of months planning the campaign before switching it to public viewing. However, it is important to point out that we were at the same time working on a number of normal business activities separate from the crowdfunding project.
Before and during the private viewing phase, we raised our profile via a number of articles in the trade press and via social media. We also decided that this was a timely opportunity to re-design our web site. Also, we invited people we know to alert their contacts that our Seedrs campaign was about to go public. We then planned further announcements in the trade press and via social media to coincide with taking the campaign public. Most of the campaign was handled by Steve Osborne, who leads our business development activities, and by RV Brand who look after our communications.
Carritech have said that the funds raised will be used to expand the commercial development of their ground-breaking formulation and process platform technology ‘ColdBake’ and to progress licensing negotiations with major food manufacturers.