Crowdfunding - a whole new dimension to starting a business
Every successful business starts with a good idea. But sometimes, particularly in the early days, the idea needs help.
Last year Institute of Directors West Midlands member Leigh Purnell had a really good idea. Well, two really.
The first idea was the product – Petalite Flux, an eco-friendly external smartphone battery charger which can recharge to 100 per cent in 15 minutes.
The second was to help the first take flight by crowdfunding.
Take flight it certainly has. And in the ever-competitive business world, Petalite Flux has provided compelling proof of how crowdfunding, if properly prepared and diligently delivered, can provide the perfect springboard for a business.
It was early last year when Leigh, a graduate of Aston University, founded Petalite Flux.
For sure it’s a bright idea - a device which fills a gap in the market, enabling phone-users to know they can keep their smartphones charged much more quickly and reliably. But even brainwaves can struggle to attract backers.
So Leigh turned to crowdfunding, a relatively new form of capital-raising whereby investors pledge money, often small amounts, to companies via websites such as Kickstarter, Crowdcube or, the one which Leigh chose, Indiegogo.
There are two types of crowdfunding, reward-based and equity-based, and Indiegogo is one of the latter category where people basically pre-order their products months in advance.
A minimum target is set and, if projects do not hit that investment level, no funding changes hands. Petalite Flux comfortably exceeded its target.
“The Angel investors we went to predictably asked ‘how can you prove there is demand for the product?,' said Leigh. "We needed to give them something solid to go on so thought crowdfunding could be the solution. It was.
"We prepared our campaign over three months last summer, ready to launch with a target of $30,000. We went on Indiegogo on November 17 and now have over $58,000 worth of pre-orders pledged.
“It has given us a huge lift in terms of PR and media and is basically a fantastic springboard for us. Now we are taking it back to investors with something really substantial behind us. Without taking the crowdfunding route, it is unlikely that we would be anywhere near this far down the line."
"We will be going into production soon, a little later than planned because, with the confidence of so many pre-orders, we are building in additional features."
It appears to be a success story which is only just beginning but Leigh Purnell is a man who likes to see things through - you only have to look in the Guinness Book of World Records to see that.
Five years ago, fresh from university, Leigh and two friends decided that, before they got to grips with a lifetime of work, they would do something different. So they set the world record for longest distance travelled in a taxi!
They bought a Coventry-made black cab off e-bay and set off on a trip which amounted to 47,000 miles spanning 51 countries, starting in Covent Garden then travelling through Europe, the Middle-East, India, Australia, Thailand, and the USA before heading back to Britain. As well as setting a world record, the marathon raised £25,000 for British Red Cross.
" We kept the meter running and the fare would have been £79,500," said Leigh. "It was the experience of a lifetime and people all over the world were really kind to us.
"They know how to make those cars in Coventry! It had done 20 years work on the capital’s road before we bought it but it still got us round the world. It was like a tank."
That adventure over, Leigh is now pouring his energies into Petalite. Thanks to crowdfunding, it looks like another winner and more investors would still be welcome (anyone interested can contact Leigh at leigh.purnell@petalite.co.uk).
Crowdfunding is a concept which the Institute of Directors believes has great potential. The IoD's national deputy head of policy Jimmy McLaughlin said: "Crowdfunding has the potential to be the revolutionary financial technology development of the 21st century.
"It is great to see IoD members using this to raise money, but almost as crucially raising profile amongst investors and potential customers."