Sramana Mitra: For investors with zero or limited experience in pre-seed or seed investment, what do you do to mitigate their risks? Of course, this is a highly risky business. How do you recommend or help your investors evaluate deals?
Korstiaan Zandvliet: I think the second part of the interview addresses risk analysis and risk management from an investors’ side. From the side of Symbid, the reference to risk is mentioned in the How-It-Works-section on the website and in the Terms & Conditions one has to agree with before making an investment. Also, the opportunity to retract shares and reinvest them in another idea is one way to mitigate risk to a certain amount. However, it remains so that with any form of investing, risk is part of the deal. It is up to the investor how much he or she is willing to risk losing.
SM: Tell us how to best use your platform. How can entrepreneurs ensure a successful fund-raising round on your platform? What are the best practices?
KZ: Our current best practices are [illustrated] by Bergerkaas, cheese factory that makes a well-known cheese called Bergens Blonde. They looking for funding to expand their current business. This entrepreneur raised €45,000 in three weeks. The main success factors were his continued efforts and contact with the crowd investors, his “amiable” tone of voice (“your dividend in cash or cheese”) and the fact that he already had a business up and running and that the reason he wanted to expand was that with the current equipment, he wasn’t able to service a large customer that would triple his sales.
Another success case was iCarezz that is currently preparing a second and third crowdfunding campaign. In contrary to the previous case, iCarezz did not have a company or product to begin with and it took six months to gather the money though the entrepreneur also temporarily was less active during that period. The active period of that campaign consists of approximately three months. The capital raised, €20.000, was needed to develop a prototype of the product. Again, the dedication of the entrepreneur in this campaign was crucial.
In more general terms, the parameters of a successful campaign are dedication of the entrepreneur, a well motivated and researched business (and financial) plan, a clear view of what the money is meant for and a clear view on future developments and scalability of the product/ service offered. Secondary factors are if the entrepreneur knows the field (not the case in iCarezz, very much the case with Bergens Blonde) and whether or not an established company or product already exists (not the case in iCarezz, very much the case with Bergens Blonde). This is secondary because in some cases there is already a company and a product, but the campaign does not continue because the primary parameter (active entrepreneur) is not met.
SM: Tell us about the geographical scope of your business.
KZ: Currently, some 500 ideas are registered on Symbid, of which 366 are Dutch propositions. The members including investors that are the main share of the members consist of 70% Dutch visitors and 30% foreign visitors. The remainder of the 500 propositions on Symbid come from the following countries: The U.S. 36; the U.K. 11; Africa 11; Italy 8; the Middle East 7; Germany 6; Spain 6; Belgium 5; Australia 4; Norway 4; South Africa 4, Singapore 3; Portugal 3; Russia 3; Canada 2; Egypt 2; France 2; Brazil, Denmark, India, Romania, Thailand, Vietnam and Finland all 1; and other countries 11.
SM: And can you discuss the types of businesses that are getting funded? Our audience is IT/ ITES businesses; what is the intersection?
KZ: Our projects are versatile. We currently provide users with thirteen categories but the projects are most often IT service/APPs (platforms, software, smartphone applications), green & clean tech (solar/wind energy, clean fuel and transport, clean water), food and entertainment (books, movies, games).
SM: This has been very interesting. Thanks for sharing your story with us, and good luck to you and your investors.