How We Raised $1.5M To Launch A Kickstarter Competitor [Update]
This is a follow up story for ConnectionPoint. If you're interested in reading how they got started, published over 3 years ago, check it out here.
Hello again! Remind us who you are and what business you started.
My name is Daryl Hatton. I am a founder, CEO, and lead investor of a team that created ConnectionPoint in 2009 as an early entrant and innovative pioneer in the crowdfunding industry.
ConnectionPoint is our platform for collaborative funding. It is the technology that powers the brands we target in different vertical segments of the crowdfunding markets. These include:
- FundRazr helps professional nonprofits and charities create sustainable funding from their community of digital donors and advocates.
- Crowdfundr (launching June 21st) is a new platform for creators and entrepreneurs to fund the development of their creative projects and innovations.
- Sponsifi empowers corporations to raise money for charities as part of their employee and customer engagement corporate social responsibility programs.
- Communitty (in closed beta) is targeted at individuals who wish to manage their portfolio of social investments i.e. charitable projects from across the ConnectionPoint ecosystem where they are more actively involved as supporters and advocates.
- CoCoPay is a crowd-financing solution that enables companies to help their customers finance the purchase of products or services using all-or-nothing crowdfunding models while simultaneously creating word-of-mouth marketing. It is focused primarily on healthcare-related companies.
To date, we have helped over 200,000 projects in 100+ countries raise over $250 million using our platforms, generating almost $10m in revenue.
Tell us about what you’ve been up to! Has the business been growing?
It is hard to believe it has already been a year since our first article on Starter Story. I wonder if other entrepreneurs have experienced time in the pandemic seems to have both speeded up and slowed down. Hopefully, they’ll tell us in the comments.
Time in the pandemic both sped up and slowed down.
It feels like time has sped by because we have achieved many significant events in this timeframe and our execution speed has been great. By also removing distractions and making us focus on important tasks at hand, it felt like time slowed down and we had more time to do things well. As a result, revenue from our core products grew over 25% YoY without additional investment or initiatives.
For the first time in our multi-year history, late in 2021, we launched a US$1.5M Seed Round of institutional investment, led by Tacoma Venture Fund (TVF). Before this point, we’d bootstrapped the business with revenue and Friends & Family investments.
We already had a good relationship with Tacoma Venture Fund based on their previous investment in a company founded by our Advisor-turned-President David Barach. Working together with David to a successful exit increased their confidence in the likelihood of success in the expansion of our business. Having them lead the round was an important vote of confidence for the other individual and institutional investors who joined later.
As we refined our product/market fit by really working with our early adopter customers to align the product and market messages with how they viewed the problem, the market opportunity for CoCoPay started shaping up well. This helped us see the potential for VC returns and a path to rapid growth.
Fortunately, we had “friendly” VC investors who knew us well and agreed to lead our round which removed much of the stress. We closed near the end of the year.
Since then, we quickly put the funds to use and doubled the size of our team in just three months including filling key executive and operational roles.
We focused our investments on sales and marketing, In particular, we flushed out our strategy of building organic traffic through high-quality and very highly targeted SEO keyword-rich web content. This has decreased the amount we need to spend on performance marketing to acquire customers i.e. it reduced the Google and Facebook “tax” on our business.
We also hired a direct sales team for managing the longer sales cycle of our enterprise accounts. Equally importantly, the extra funds also enabled us to hire more development talent in the highly competitive Vancouver market.
With all the new and improved marketing activity, an unexpected thing happened: we started to attract attention from a significant group OUTSIDE of our core target markets. Customers started migrating to FundRazr from Kickstarter!
The irony is, with FundRazr, we never even TRIED to compete in the creator market. Despite that, industry publications such as Investopedia and The Hustle Story consistently listed us as one of the best alternatives to Kickstarter. We surveyed the new customers coming in and they enthusiastically agreed we had significant advantages over Kickstarter BUT they said that when they first looked at FundRazr, it was hard for them to see if it was a platform they could use. The messaging was all about charities. We were so focused we’d failed to see an opportunity. Facepalm…
Keep your head up so that new opportunities don’t have to kick you hard to get your attention.
In the space of just two months, we’ve made detailed plans to launch a new brand specifically for the creator and entrepreneur markets to compete against Kickstarter, Indiegogo, and Patreon.
Our new platform, Crowdfundr, launches with a select group of customers in late June. Check it out!
What have been your biggest lessons learned in the last year?
One of the key things my team has learned from previous expansion periods and reinforced this year is that is it important to overestimate expenses and underestimate revenue for at least the first few years of a new product.
This is hard because we are not only excited and optimistic, but we are hoping to impress investors with the potential for revenue growth. The sad truth is that, in the beginning, expenses almost always grow faster than revenue, so it is wise to both raise more money than you think you’ll need and do your best to curb your enthusiasm for spending it to try new things along the way.
The other key lesson that emerged in this period is that having a well-defined mission for your business is incredibly important in acquiring high-quality talent.
The Great Resignation is not about people leaving the workforce, it is about them reevaluating and reprioritizing the things they make important in their lives.
Now, if you are not fulfilling their purpose as well as filling their pockets, they’ll pass on your opportunity. When you get it right, the high-quality talent that shows up EAGER to work with you is awesome. And you don’t have to outbid all your competitors to get them as money is no longer the driving issue.
What’s in the plans for the upcoming year, and the next 5 years?
This year has already been packed full of new product plans, new markets, and team expansion. To help us deal with the volume of work this has created, we’ve elected to slow down our work on our Communitty and Sponsifi brands. They are good products, but we need to focus our efforts to help us achieve the full potential for success inherent in Crowdfundr and CoCoPay.
From a product perspective, we are continuing to invest in making our technology and therefore the brands on top of it, the most advanced digital fundraising platforms on the planet.
When life gets challenging, just keep walking. It changes your perspective.
For me as a technical CEO, this is one of the most exciting and rewarding parts of the business! When I’m feeling drained, I recharge by rewarding myself with a bit of time planning the future of my products…
We intend to use the next 18 months to scale up the business for our three major brands and use that proof of product/market fit and sales traction to set the valuation for a Series A investment round. Expansion based on that will easily take us about five years out.
Have you read any good books in the last year?
I hate to admit it but I’m not much of a book guy. That doesn’t mean I don’t focus on improving my leadership style and knowledge every day. I proactively look for lots of examples of what is working in businesses and leaders I know. I take a conscious approach to learning from EVERY interaction I can including ones that I only observe (such as between my team members).
I invest extra energy in mentoring young entrepreneurs on the side because I learn much more from them than I think they learn from me despite my best efforts to help them as much as I can.
You can think of this as a video game. I not only play my life in the first person but also the third. Some of the best learning comes from the third.
Advice for other entrepreneurs who might be struggling to grow their business?
When I was struggling to grow ConnectionPoint against sometimes terrifying headwinds (Facebook and PayPal started giving away our core value proposition for free which reduced our revenue by half in the year following their announcements) and unexpected corporate and personal near-death experiences (seriously), the thing that kept me going was the optimism that there is ALWAYS something you can do to improve the situation.
Each one may not feel like much but stringing a bunch of small improvements together can generate surprising changes like the threat.
You can always take one more step. Just put one foot in front of the other. Repeat. And repeat. It is a grind but eventually, you will outlast the storm and will find that you’ve covered lots of ground towards your goals. From your new vantage point, you’ll likely see better ways to solve the problems in front of you.
Are you looking to hire for certain positions right now?
We have just celebrated filing the last senior leadership position on our team (this week) so will be slowing down our hiring for a bit. In the fall, I expect we’ll be looking for more sales and client success roles. If you are interested in positions like that, please email [email protected]
Where can we go to learn more?
- ConnectionPoint
- FundRazr
- CrowdFundr
- CoCoPay
- My speaker’s website
If you have any questions or comments, drop a comment below!
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