Business Surgery: Fundsurfer

Name of company: Fundsurfer
Year established: 2014
Where the company is based: SETsquared Incubator at Engine Shed.
Sector: Alternative Finance.
Number of staff: 4
Owners: Oliver Mochizuki and Derek Ahmedzai
Key clients: Funding Circle, Start Up Loan Company, MarketInvoice,
Resonance, Bristol Green Party

The Background

The concept for Fundsurfer originated in 2012, when one of the co-founders, Oliver Mochizuki, who is also a film producer, crowdfunded £2,000 for a short film in a matter of days.

“To see how easily we were able to connect with our existing personal networks to raise funds was an eye-opening experience, I began to research the market and the idea for Fundsurfer was born” says Oliver.

Having co-founded Brisfest, the Bristol music and arts festival, Oliver personally understood the difficulties around fundraising for social and creative projects and could see that alternative finance had the potential to disrupt and completely change the funding landscape.

Fundsurfer launched in May 2014 and started out offering rewards and donation-based crowdfunding. But both Derek and Oliver had realised that crowdfunding would quickly become just one of the many ways that projects and companies would be funded.

They steadily built a UK wide network of lending partners to open up access to a wider range of funding options that included crowdfunding but also start up loans, peer to peer funding, equity investment, social funding, equity based crowdfunding, invoice finance and pension-led funding.

Fundsurfer uniquely combine these funding options with funded support to get investment ready.

Derek said “while funding is the number one issue for our customers, getting ready for funding or ready to crowdfund came a close second”.

The Challenge

Since their launch in May 2014, Fundsurfer has helped raise over £150,000 for creative, green and social projects and companies, achieved with a marketing budget of just £1000 in 12 months. With investor interest in the company growing and offers of equity investment being made, should they continue their bootstrapping model and grassroots development or take investment now and grow faster?

The Experts

“Whilst Fundsurfer has a unique position in its market, I think that the proliferation of similar firms like Crowdcube, LendInvest and Seedrs will come to a head once a number of them achieve the size and scale to start consolidating through acquisitions. If Fundsurfer has either unique technology or a unique network of relationships it could be an attractive acquisition target, especially if the scale of its turnover remains on its current path.

Exiting for cash is fine, but if the founders want to shape this emerging industry or champion particular causes and retain control, then they are going to need to fortify the business. Whether it’s retaining the relationships, bolstering brand recognition or developing better technology to support the service, it is difficult to understand how this can be done without investment.

 Assuming the founders want to preserve the spirit of the firm and control of the entity, the key considerations will be:

•        knowing exactly what to target investment at

•        partnering with the right investors who share the same endgame

•        structuring rounds, instruments and terms so that founder control is preserved.

Our annual Fast 50 Technology Programme celebrates startups that have made it into super growth, and explains their common defining characteristics and strategies.”

“There are two obvious challenges for Fundsurfer: visibility and differentiation. There are now dozens of crowdfunding sites that have now been set-up, thanks to the relatively low cost of entry to the market. To be successful, Fundsurfer needs to stay visible to its clients and its clients funders. I suspect Fundsurfer has enjoyed the honeymoon period of any new start-up, when it is relatively easy to get PR, especially in the local area. 

However as time moves on, they will need to ‘buy’ visibility through marketing and PR. The most obvious form of this, in their case, would be PPC (pay per click) via Google Adwords or social networking through the likes of Facebook, Twitter, etc.. To improve their Google ranking in a natural search (i.e. a Google ranking which isn’t paid for) they need to start writing relevant blogs about crowdfunding and other related topics. This is free, but it obviously takes time and effort. To maximise the available marketing budgets, they could go for the local approach – Bristol’s best crowdfunding company, though this could limit their potential customer and funder base. 

The other challenge is differentiation, which they appear to have through the charitable and green projects it is helping. This could be their differentiation, but again, this is a relatively crowded market and one which I suspect it will be harder to make money out of. I think they have three clear choices: 

1) Get big: Go for funding themselves, raise some capital, relinquish equity, spend on marketing, raise the profile, become one of the market leaders. 

2) Get niche: Focus on a ‘type’ of crowdfunding or a geographic area 

3) Get out!”