By Eoin O'Hara
Going after investment must surely be one of the most daunting and thrilling challenges that any startup will ever experience. There are so many questions that you need to ask yourself, so many angles to be considered, and so many different funding channels out there. The whole thing can quickly become very complex indeed.
In cases like this, the wisdom of others who have successfully raised investment becomes invaluable. Earlier this year, Andrew Lasota, co-founder of innovative London startup CornerDrop, managed to raise £75K in just two days. His tips and advice should help give a little encouragement to anyone considering taking the next crucial step with their business.
First off, can you tell us a little about CornerDrop? What problem does it solve and how?
Missing parcels is a massive headache for everyone involved: customers have to stay in all day, or drive to anonymous warehouses miles from home; online retailers lose sales because they simply can’t get products to customers, or courier companies waste time and energy trying to deliver parcels when no one is home.
The bigger online retailers can afford to get agreements with big couriers who offer some alternatives, but these are only available to customers if that online retailer happens to use that particular courier company offering that particular solution. Also, they will only deliver to their one store in that town or area – and that might not be close to you anyway. Also, the smaller online retailers – all those great little businesses that everyone loves – can’t offer a click and collect service because the courier companies are only interested in the big retailers... They are missing out completely!
CornerDrop does a few really special things:
Firstly, you can use our service from any website for any purchase. We use codes as an alternative to your name, and the address of the CornerDrop you select. Our CornerDrop locations recognise the code and look after the parcel until you are ready to collect it. Then, simply show your code and unique PIN code to the CornerDrop and they will hand over the parcel. Easy. We don’t care which company is actually delivering the product, so it’s available to everyone.
Secondly, it’s really easy for any bona fide business to become a CornerDrop location. They can simply register online at our website (www.cornerdrop.com/become). There is no technology required on site (no barcode readers, and so on) and we send everything needed out once confirmed. We also limit the maximum number of deliveries per day, so smaller locations will never get overwhelmed. Customers can nominate a location to become a CornerDrop and we will try to recruit it on the customer’s behalf (or alternatively, customers who get a shop to register with their details get rewarded with some free use credits).
Finally, we have a free plug-in that online retailers can install and offer the service straight from their website (we used Magento Community Edition software) on a PAYG basis – great for customers, and great for online retailers, especially as they do not need to change any of their current delivery solutions.
Who are the team behind CornerDrop? What are your backgrounds?
I'm Andrew Lasota, the guy who came up with the idea after missing one too many of my wife’s parcels. Having a background in (automotive parts) logistics, I knew there was a solution out there for the taking. In 2010 I actually tested the process out with around 70 locations in the south-east of England and a pretty rudimentary website. Click and collect was very new then, so it was a hard slog, but the lessons learnt then have put me in very good stead for when we re-started the project towards the end of 2013. The one fundamental difference from then to now is that we can complete a plug-in for online retailers at significantly less cost than we could then.
Entering a contest in late 2013 at Google and getting into the final 10 gave me the impetus and the direction to get on and re-launch CornerDrop properly. Part of this was finding a co-founder, which I did through a process called Founder Dating (yep, it exists!). My star date was Dan Grimes, who has been invaluable in making sure all the tech works and everything happens as it should. Dan has a background in banking and secure coding. He set up all the databases and processes that deliver the unique codes, and also all of the management functionality that’s needed to manage it.
We also have Daniel, who is based in Kiev, Ukraine. We really needed someone who could pull Dan’s back-office data into a ‘pretty’ front of house website. Daniel had all the skills in abundance, and with video calling so easy these days, he really is one of the team.
Finally, but not last by any means, Suzy is our social expert. Her background is managing digital and social marketing for very big blue-chip organisations (Samsung Europe and BlackBerry RIM) and she is a wizard at making sure as many people know about us as possible.
You guys recently had amazing success raising £75K in two days on equity crowdfunding site Seedrs. What do you think made your campaign such a rare success?
A number of things came together well. We had a great business idea that helped to resolve a real pain point for a great many people. We also had a brilliant team and had already managed to get a number of things in place prior to actually starting (like an agreement with a national chain to use CornerDrop).
Also, and this was critical, we had the support of a number of family and friends who helped get the campaign running. These ‘big ticket’ investors add confidence to the campaign, making it more attractive to other investors. It’s almost like one follows another and they don’t want to miss out – that’s what happened with our campaign.
Can you tell us a little about the accelerator programme that Cornerdrop took part in, and how specifically this helped to make you ‘investor ready’?
We were pleased to get a place on the Accelerator Academy (Q1 semester) in 2014. This 12-week programme made sure we had everything in place for an individual to invest in the business. Specifically, for the most part, it involved us making sure every aspect of our business plan was thoroughly researched, and that any alternatives, threats, opportunities and so on. were considered fully.
It can sometimes feel like a futile process, as it is practically all theory (remember, the business is not yet trading, so everything is a guess), but working through all the options and ideas gives you the ability finally to write a plan in a very short space of time. It also makes you extremely confident in what you are trying to do, if you know it’s the right plan. Having other people critique what you are doing is actually enlightening, and often frustrating. But the great people we met (including, randomly, the daughter of the man who invented Tetris!) and their support and feedback is worth it.
After the 12-week programme, we completed an open pitch to a room full of potential investors at the Royal Bank of Scotland’s head office in London. Daunting, but great practice, and again, we got some great feedback.
Many early-stage startups struggle to demonstrate in their business plan the worth and scalability of their venture. Can you shed some light on how this can be achieved without a large injection of cash?
Research, research, research! I spent days in the British Library looking at industry reports. They are completely free to look at there, but cost the industry thousands to buy and are worth their weight in gold.
You can get quite a lot online, but the really valuable stuff is at your local library. You just need to get out there and ask for their help and you will get it. I cannot stress how useful and helpful they are. And most importantly, it's completely free!
Also, become an expert in your field. By doing this, you'll find it easier to write your plan. If you're finding it hard, it could simply be because that opportunity is not there at the moment – as with us in 2010 – but could be later on or in another, slightly different guise.
I read all I could on the subject and can spout figures off the top of my head like there's no tomorrow (although it's a little harder now new reports are coming out all the time), but this confidence helps in writing your plan, and also in selling your idea.
Can you give us an idea of who invested in CornerDrop through Seedrs? Was it small amounts of money from many people, or large amounts from a few? Did you know the people who invested?
Our first round raised almost £100k before we stopped it as we were only looking for £75k. Of the 104 investors we had, we knew personally nine individuals who invested around £27.6k. The remainder came from individuals we did not know. Our largest investor, who we didn't know, placed £11.4k with us. Our smallest investors were for £10. We had a few of those and we are most appreciative for each and every one.
You guys utilised the government’s SEIS / EIS incentives. These schemes sound very complicated on paper, which is very off-putting to some startups. Given your first-hand experience, are there any words of reassurance that you can give on this matter?
It is only as complicated as you want to make it. Any decent crowdfunding site will direct you where you need to go to get the Advance Assurance letter for HMRC. But it’s very easy to complete yourself and is essential.
It takes around six weeks to get the letter back from the government, so get your application in early. You will get many offers from many organisations to complete this task for you – charging from £500 to £2,500! We got ours for the price of a first class stamp! You can too!
If you've completed your business plan, complete the application through this website. Print and post the documents. Our business plan was not absolutely complete, so we sent a short four-page overview document. Without this in place, funding will be very much harder – I would suggest you don’t even try without it.
Furthermore, if you have friends or family who wish to invest, this is the way to do it. Don't accept direct funds from them, it's extremely tax-inefficient. This way, they get half their investment back in the first tax year, most of their investment back should you fail, and should you succeed, they pay less tax on any profit.
Obviously, research this in detail, but here is a very good overview.
What are you guys hoping to achieve with CornerDrop over the next year or so?
We have some pretty clear operational goals to achieve – namely 2,000 CornerDrop locations and 150 Magento plug-in users.
We also reached the MassChallenge finals; we're one of just 218 global companies who have been accepted, so we're excited about this opportunity.
We have other targets in place, but maybe I should keep some things a secret... Let’s see what happens in the future. But remember, use CornerDrop and never, ever miss another parcel!
Find out more about CornerDrop
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Eoin O'Hara is a business developer at Startacus.net
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