Raising funding for a startup is a critical milestone. It not only fuels the growth of your business but also signifies that someone believes in your idea and team enough to financially back your vision.
Now, imagine a tool that enables you to secure funding from hundreds of people who will also become your customers and advocates—people who stand to benefit from your success. Such a tool exists, and it’s called Equity Crowdfunding!
Today, we speak with Hugh Craigie Halkett, CEO of Stamp Free, who successfully leveraged equity crowdfunding to grow his business and build a community of supporters.
But before diving into the conversation, here’s a quick overview of equity crowdfunding.
What is Equity Crowdfunding?
Equity crowdfunding is a fundraising model that allows companies to raise small amounts of capital from many individuals in exchange for equity (shares in the company). These campaigns are typically hosted on regulated crowdfunding platforms, ensuring compliance with local financial regulations and providing a safe environment for investors and entrepreneurs alike.
Interview with Hugh Craigie Halkett, CEO of Stamp Free
Q: Hugh, thank you for joining us! Could you start by telling us more about Stamp Free and its journey?
As with all hopefully good ideas, Stamp Free was born from a common place problem that we all have faced. June 2018 I had two letters I wanted to post. I drove several miles in the pouring rain to Tesco at Hermiston Gait on the edge of Edinburgh. I parked in the car park with rain drumming down on the car roof and was struck by the sheer absurdity of having to drive miles to buy a sticky label to send a letter when I could ping an email or a WhatsApp message in a split second. It seemed a 19th Century solution for a digital age.
I figured that there must be a way to send parcels and letters just by using your phone. The only problem was my knowledge of the postal sector extended to putting a stamp on an envelope, and as you will have gathered, I wasn’t even particularly good at that! However the concept behind Stamp Free seemed to me as obvious as 1+1 adding up to 2, so I committed to it. The solution, a code written on a parcel or letter, AI validated by the camera on a customer’s phone, then shipped in the normal way by postal app, WhatsApp or other social media channels.
I then spent a couple of years without pay, living on savings, cold-calling board members of postal companies around the world to validate the concept whilst engaging with a software development company to develop a prototype. Recognising my own lack of sector experience, I invited a team of senior players from across the postal sector to join Stamp Free (I say invited as we had no money at the time, so offered the strength of the idea and share options). From there we closed our first funding round in September 2021 and went from strength to strength, winning a number of global technology innovation awards, international clients and securing patent protection for our AI phone-based shipping solutions.
Q: Why did you choose equity crowdfunding to raise funding for Stamp Free?
I have always liked the idea of crowdfunding and indeed went on a crowdfunding course back in 2020 to educate myself on it. Early 2023 we conducted independent market research across 1000 people across the UK on our Stamp Free AI shipping solutions. 93% of respondents said they preferred our shipping solutions for sending in parcels and letters in place of the shipping solution they currently used. That got me thinking. If our shipping solutions so obviously resonated with everyday consumers then it made sense to offer the opportunity to angel investors on crowdfunding platforms to invest in Stamp Free – they were everyday consumers who posted parcels and letters just like everybody else.
Q: With so many crowdfunding platforms available, what criteria did you use to select one?
The two largest crowdfunding platforms in the UK and indeed across Europe are Crowdcube and Seedrs/Republic. It made sense to raise on both platforms, since to raise on just one would limit Stamp Free’s ability to raise from the crowd. These two crowdfunding platforms are competitors so opting to raise on both over a 12 month period did present a couple of challenges, but they were overcome.
Q: Could you guide us through the process—from choosing a platform to running a successful campaign?
Stamp Free has now run two successful crowdfunding campaigns on Seedrs/Republic and Crowdcube. Both were overfunding by circa 240%. We are now running our third campaign, this time on Seedrs/Republic again and currently we are 153% overfunded after having been live on the platform for five days.
First off your investment offering, your company must resonate with the crowd. Talk to a number of crowdfunding platforms and gauge their interest in it and how likely they think it is to succeed. If they are very enthusiastic and they have a good track record then you could be on to a winner. Use that enthusiasm to negotiate on what percentage fee you will pay the crowdfunding platform on the back of any investment you raise. They will not have much wriggle room, but should have a bit if they want you.
Secondly, to raise on a crowdfunding platform you must seed the campaign first with investment from other sources. Based on my experience, if for example you want to raise £500,000, you seed with say a minimum of £160,000, set an investment target of £250,000 and look to close the campaign at over £500,000 - that is what Stamp Free did with Crowdcube in June 2024.
Thirdly you need a good pitch deck, preferably a professionally prepared crowdfunding video (Digital Triangle Creative prepared ours at a competitive rate) and other collateral (financials, online pitch material etc). We are fortunate enough to have an excellent CMO who worked with me in preparing this material.
Fourthly, if you are a B2C offering you should have a good crowd of followers/customers whom you can promote the campaign to when it goes live and who hopefully will invest in you. Stamp Free is a B2B company, our clients are posts/carriers and retailers so we didn’t have a consumer based crowd already which was our one area of weakness. Fortunately the strength of our offering attracted investors from the two crowdfunding platforms we used, which overcame this obstacle.
When you go live, you the CEO/Founder communicate one-to-one with every investor on the platform who shows an interest in your campaign. Answer questions promptly and in all the detail you can - 24/7 and at weekends. Remember a typical campaign follows a smile curve, loads of investment activity at the start and end of the campaign with a quieter period in the middle.
Finally give plenty of warning when you are going to close the campaign and then close it by a given date. Do not let it run and run in the hope of raising more money. Perception is everything. Leave them wanting more. Generate investment momentum. Make key announcements during the campaign if you can. Constantly engage with your crowd.
Q: What were the biggest challenges you faced while preparing your campaign?
Running a crowdfunding campaign takes up your time. One of your main jobs as a CEO/Founder is to ensure your company has the money it needs to survive and grow to realise the opportunity that your investors invested in. So you need to devote time to the campaign whilst also running the company – this isn’t always easy.
You will either love it or you hate it. I love talking to people who want to use our AI shipping solutions and are enthusiastic about our company. They will ask you a range of searching questions, but if you know your business and are prepared, it is not difficult to answer them.
Q: Reflecting on your experience, what lessons did you learn, and what would you do differently in a future equity crowdfunding campaign?
Stamp Free is either the first company ever to raise on multiple crowdfunding platforms or one of the first. Most companies choose one or another platform and stick to it. They do this because it is easier and because crowdfunding platforms do not like their client companies going elsewhere. This is naïve in my view, both of founders and crowdfunding platforms. If CEOs/Founders have a company that resonates with the crowd then it seems obvious to me that you should raise from multiple crowdfunding platforms to offer your investment opportunity to as wide an audience as possible. In turn crowdfunding platforms need to recognise this and more easily allow their client companies to do so.
Q: How can a startup ensure its investors become its strongest advocates? How do you engage with investors after the campaign?
Most importantly, it is the responsibility of all companies to update their shareholders on progress on a regular basis (whether their shareholders come via crowdfunding or elsewhere). At Stamp Free we issue Shareholder Updates three times per year.
From a company perspective, one fringe benefit of this is that shareholders are more likely to keep investing if they are kept in the loop and have faith in the CEO/Founder.
At Stamp Free we are fortunate enough to have a Silicon Valley based VC as our principal investor and a number of other entities on our cap table alongside our crowd investors. Crowd investors have a range of experience so use it. If they offer to help you take them up on it. They can make introductions for you. They can act as a focus group for your ideas or test your product. They provide a wealth of value beyond the money they invest.
Q: Finally, what are your top tips for running a successful equity crowdfunding campaign?
I have provided a number of top tips during this interview. My final one is this. Believe. If you genuinely believe that your product, your company will be a success with the certainty that you believe the world to be round, then raising investment and for that matter securing clients and indeed running a company is so much easier. Believe and it will happen. If you don’t totally believe, you shouldn’t be running your company nor offering it as an investment opportunity to anyone.
Closing Thoughts
Thank you, Hugh, for sharing your valuable insights! Your experience is sure to inspire and guide many startups on their funding journeys.
If you’re interested in becoming a shareholder in Stamp Free, check out their fundraising campaign here.
Important Reminder: Investing in crowdfunding campaigns carries risks, including the potential loss of your entire investment. Make sure to evaluate all opportunities carefully before investing.
For more information about crowdfunding and investment opportunities, visit crowdinform.com.
