Steve Folwell is Managing Director at LOVESPACE, the first storage-by-the-box company in the UK. Based at 60 Gray's Inn Road, the business is now on to its second round of fund raising and its crowdfunding campaign on Crowdcube closed this week, raising £580,090, 16 per cent more than its initial target.
They've already raised their target of £500,000 but click here to get a feel for their campaign. Steve answered some of our questions in the lead up to the Informed Funding event where he'll be speaking more about the crowdfunding process to Opun CEO Rod Brown.
You crowdfunded initially. Can you tell us about your second round (when you decided not to crowdfund) and why you came back to crowd funding for your third round?
We decided to go back to Crowdcube for this raise following an extremely successful experience on the platform. The fact that we overfunded our 2014 target by 260% and received further investment in December last year from existing shareholders, convinced us of the long-term benefits of acquiring investors through crowdfunding.
Our relationship with Workspace is a great fit for both parties, due to the unique storage and logistics service that we offer to growing businesses.
We didn't crowdfund for our raise in 2015 because Workspace Group plc were very keen to invest in our service and ended up leading that investment round. Our relationship with Workspace is a great fit for both parties, due to the unique storage and logistics service that we offer to growing businesses. It’s been a very beneficial partnership that has helped us to evolve our B2B offering, as well as growing our business customer base.
How are you approaching this crowdfunding round differently to the first? What have you learnt?
We've learnt that momentum is really important when raising money through the crowd. We've had good days and slow days on the platform, and have noticed that the good days definitely create a snowball effect, attracting more investors.
We've also noted that this round has differed from the raise in 2014 in that there is more polarisation in investment amounts - we've had multiple angels investing very significant sums and many smaller investments of £100 or less, but fewer falling in the mid-way range.
How have you managed the administration that goes with the crowdfunding process?
The crowdfunding process definitely takes up a lot of the senior management team’s time, but we have not found it overwhelmingly burdensome.
When I think of our biggest challenges, they are more likely to come from unexpected external sources.
Generally, the questions that have been asked on the platform are quite straightforward to provide an answer to. It has also helped to have supporting information easily at hand to be able to get back to investors promptly.
Has funding been your biggest business challenge or has it been something else?
Although it can be incredibly time-consuming, we wouldn’t say that funding has been our biggest challenge. Each round has required a lot of work for various reasons, but thankfully we’ve had a great reception each time so far. When I think of our biggest challenges, they are more likely to come from unexpected external sources. One that springs to mind is when we found out that our courier partner City Link had gone into administration on Christmas Eve 2014. That required a quick reaction from us, which thankfully we were able to execute very well.
I am particularly proud of the fact that one of our team took it upon himself to drive all the way up to Aberdeen to deliver a customer’s materials in time for Christmas on that occasion.
What are you going to spend the money on?
This raise will help LOVESPACE to accelerate our investment in technology. This will include hiring additional development talent, allowing our in-house tech team to continue to develop cloud APIs as well as delivering additional features for our new consumer facing app. This additional funding will also allow us to supplement our marketing activities with brand campaigns, in a similar manner to the Tube campaign we ran in Q4 2015, and will put LOVESPACE in a prime position to expand internationally when the strategic timing is right.
Join the discussion around business and funding with Steve Folwell and other experts. To find out more about the Informed Funding event on 9th June, 10.30am at Kennington Park and to reserve a place, click here.