Korstiaan Zandvliet holds an MSc in New Business Venturing and Entrepreneurship and has a background in sociology and business administration. He is a frequent writer of blog articles on social media, crowdsourcing and c. After holding a position as marketing manager for a Dutch software company (www.mendix.com), he co-founded a company called Symbid, which aims to help nascent entrepreneurs to overcome financing problems for their start-up or small business. Symbid focuses on entrepreneurial finance needs up to €2.5 million by using the concept of crowdfunding in a new way. In contrast to currently available crowdfunding sites, Symbid developed a financial and legal framework, which allows crowdfunders to actually become a shareholder of the offered crowdfunding propositions. For more information, visit www.symbid.com.
Sramana Mitra: Korstiaan, welcome to the blog. To start, would you tell us more about your offering is in the domain of crowdfunding to fund startup ventures?
Korstiaan Zandvliet: We offer entrepreneurs the chance to get their idea, company or early start-up funded by selling shares of the company from €20 and up. Investors get the opportunity to invest in the next Google and can celebrate an increase of value of their shares as well as receive dividends. Symbid facilitates a platform and infrastructure that allows entrepreneurs and investors to co-develop an idea while attracting money and knowledge that will help grow the start-up.
SM: Are you a for-profit or a nonprofit? What is your business model?
KZ: Our business model consists of matchmaking between entrepreneurs and investors, a transaction model for the online crowdfunding platform and a subscription model for license of software and legal construction. The related revenue model consists of a transaction fee (2.5% of the total cash inflow), a success fee (5% of any successfully funded proposition), a fee for existing companies (€250 per company), interest income (+/- 1% of the total cash inflow) and the sale of white label and standalone versions of the Symbid infrastructure.
SM: How do your investors fund businesses? Donation, equity, or debt?
KZ: Symbid mainly focuses on equity financing within Europe for entrepreneurs and investors. Recently, reward-based crowdfunding also became an option; for this option we can serve investors and entrepreneurs on a global scale.
SM: How would you describe the psychology of your investor community? Why are they participating in this sort of funding exercise? What are they looking for?
KZ: The investor community consists mainly of men aged between 25 and 45, but the entire group consists of 10%-20% women and approximately 30% international (i.e., non-Dutch) members. In general, there are three reasons why people invest. First, they’re somehow connected to the entrepreneur and either have a social obligation (direct friends & family) to invest or a social interest (direct friends & family, acquaintances, colleagues, alumni, etc.) to invest. Second, people find an idea interesting regardless of whether they know the initiator of the idea. Last, people believe investing is somehow profitable to them, either in the long or short term. Short-term profits generally mean perks or extra gifts they might receive in addition to their equity investment. Long-term profits tend to indicate larger investors, too, who understand the development, life cycle, risks, and possible profits of investing larger amounts of money (e.g., €1,000-€10,000). This group also tends to ask more in-depth questions about the revenue model, future developments, and partnerships or in-depth questions about the product: they are knowledgeable about some crucial aspect of the entire start-up.
SM: And the entrepreneurs – what is the typical psychology, and at what stage are the entrepreneurs participating in your community?
KZ: From the perspective of experience there are two groups, experienced and inexperienced crowdfunders. Experienced crowdfunders either have crowdfunded before or have been otherwise involved with crowdfunding in the past. They recognize obstacles, added value, key success factors and can estimate time, costs and other required resources quite well. Inexperienced crowdfunders come to Symbid quite unprepared or with only a vague notion of what crowdfunding is. The learning curve is pretty steep and leads to the split in the next group: dedicated and not dedicated entrepreneurs. The latter will quickly find the infrastructure too complex; they don’t understand the valuation of their own business idea or the added benefits that it offers to potential customers. This group has an idea and often puts it online immediately.
The dedicated group generally has been working on an idea for quite some time and finds it difficult to attract funding from other sources. They turn to crowdfunding as an alternative and are orientation and information focused in the beginning. They ask questions, do some initial online research about crowdfunding, or want to arrange meetings with persons within Symbid and at that time are capable of naming between one and five online crowdfunding platforms that might be an alternative to Symbid. These people are also capable of attracting alternative financing in later stages and acknowledge other benefits of crowdfunding besides the money.