Is Crowdfunding A Viable Option For Indie Beauty Companies?
In this edition of Beauty Independent’s ongoing series posing questions to beauty entrepreneurs, we ask 11 founders and executives: Have you run a crowdfunding campaign and, if so, how did it go?
- Lauren Haynes Founder, Wooden Spoon Herbs
I did an Indiegogo campaign earlier in 2018 to help fund my studio build out. I was very excited and pretty confident that I'd raise at least half of the money I needed. Ha! What I learned is that crowdfunding is a full-time job and, if you're the only person working in your business, it's a lot to juggle.
Ultimately, I raised only 10% of my goal. While I'm very thankful for that support, it was a lot of work. At a certain point, I just felt sheepish about asking for donations time and again, but that's what you have to do. I'd do it again if it was my only task for that time period. My favorite takeaway was feeling the love and support of my community.
- Emily Hines CFO, Co-Founder, Sweat
We successfully executed a crowdfunding campaign for equity this summer. We had gone to what felt like was every VC/private equity/angel investor in this country and kept getting the cold shoulder. Knowing this was a highly untapped market and that we desperately needed capital for more inventory, we took matters into our own hands. The response couldn't have been more positive.
I will be honest that, when we first went live, I was terrified we wouldn't hit the minimum of $30,000, and we would be publicly humiliated. Thank goodness I was wrong, and we closed our campaign at $255,000. This not only allowed us to replenish our inventory, but also invest in a whole new marketing strategy.
I would absolutely recommend this approach for anyone who was feeling similar to how we were. My biggest recommendation would be to not cut any corners, execute the diligence process, and really invest in the marketing and advertising of the campaign upfront. It will pay off in the end.
- David Simnick CEO and Co-Founder, Soapbox
In the very early days of Soapbox, we ran a crowdfunding campaign. It wasn't too successful. We've learned that, if you want to run a successful crowdfunding campaign, you should have at least one-third of the funding ready to go on day one, a sizable PR push and an aggressive digital campaign manager that is going to poke, push and consistently be on the minds of your fans, friends and followers.
- Antonio Weiss Co-Founder, Thomas Clipper
We've run three successful Kickstarter crowdfunding campaigns [and] created our own platform, First Edition, on which we're about to launch another crowdfund for our new line of leather travel goods: The Modena Collection. We've also run two successful seed equity investment capital raises on Seedrs. These were an excellent way of allowing our customers to get even closer to the business.
Ninety percent of the equity raised came from our existing customer base, which we took as a brilliant sign of confidence from the people who matter most to us, our customers. We make considered products for well-traveled men, and community is a core part of who we are. That means we ask our customers what they want us to make, how we should make it, and we let our customers become shareholders in the business.
- Beatrice Feliu Espada CEO and Founder, The Honey Pot Company
Although we gave it our best effort, crowdfunding didn't turn out to be a successful means of raising money for us. We found that our followers didn't really get behind the effort and also didn't understand the process. We do believe that crowdfunding could be a good option for certain types of businesses, but it's not an option we would utilize to raise capital in the future.
- Rachel Vicknair Founder & CEO, Leopara
I recently completed a Kickstarter Campaign to raise funds for our upcoming launch of the Leopara Makeup Lighting System. I was successful in hitting my goal, but not without relentless promotion and 110% focus to the campaign. However, you should also know that I didn’t follow many of the Kickstarter tips regarding how far in advance to market, email list minimums, press outreach, etc., as mine was a last-minute decision.
If I had to do it all over again, I would spend at least three months pre-marketing, building my audience and creating the campaign page. That being said, I’m not 100% certain I would do Kickstarter again due to it being primarily male-driven and having been made aware of the numerous beauty campaigns that fail.
I think indie beauty founders should also know that many of the highly successful campaigns you see have had a significant investment upfront to build out the campaign, and spend a significant amount during the campaign for digital ads and crowdfunding-specific marketing companies. Crowdfunding is not a “build it and they will come” [endeavor]. So, if you don’t have the capital to invest in fancy campaigns, set a conservative goal, follow all those tips you read and get creative.
- Awa Diaw Co-Founder, Nekawa Beauty
From late April until the end of May, we did a Kickstarter campaign to try raise $15,000 for our company. While we did meet our goal, we learned a lot from that experience. We learned that even though a large portion of the pledges came from family, friends and those familiar with our product, it was extremely difficult to gain traction with those outside of that circle.
We also learned a lot about the timing of when to do crowdfunding. We did it during a time when people are probably spending more money toward things such as graduation or vacations. So, if we were to do it again, we would pick a different time of the year. We would recommend it to more known companies or brands who have been in the market a bit longer than us or those who have more access to drive marketing to increase engagement with their crowdfunding campaign.
- Marie Drago Founder, Gallinée
We did a crowdfunding campaign and started with a nice party. We hand-filled 400 samples, printed little cards, made a speech, and got a bit emotional. It was a really good night, and a great start for our brand.
Thanks to this, we filled 10% of our target in 24 hours, and the rest was a breeze. We reached our target in five days. It was a lot of prep work, and this is really a full time job, but I would recommend it for new brands. It helped us finance our production et pre-sell part of it, validated the concept so that we could go and talk to buyers with already some successes before even launching.
We also had 200 customers from day one and all of them really engaged with the brand, with loads of reviews and feedback. I really recommend this type of funding because it is so much more than just money.
- Gillian Stollwerk Garrett Founder, Gilly’s Organics
I had an outstanding experience crowdfunding with iFundWomen. I successfully raised over $30,000 towards the repackaging of my line that will launch in January at Indie Beauty Expo in LA. It was amazing to work with the team at iFundWomen, and I went on to speak at many events about my success. Even Entrepreneur magazine covered my story.
- Jennifer Freitas Founder and CEO, The Truth Beauty Company
I certainly have contemplated crowdfunding as an option when it comes to raising capital. I think, when it comes to entrepreneurship, the most successful people have multiple revenue streams. So, although I have a few brick-and-mortars under my belt, the cash flow is strong enough with them that I would be able to leverage them to funnel more growth that way if I choose.
However, there are a few more internal projects within the Truth Beauty brand that I would use crowdfunding as a means and, in fact, am looking to explore it more. I feel I have a strong brand that is deeply rooted in community, and I feel many people would want to be part of the Truth Beauty story.
Overall, I think crowdfunding is part of the new approach to business. So much is focused on the social enterprise aspects now of a business, which is great as I believe it offers a layer of authenticity and accountability.
- Crystal Williams Founder, The Balm Shop & Co.
I think crowdfunding campaigns have great potential for success with raising capital. However, I personally have not been a big fan of this method because of overuse. I have seen campaigns for everything from business startups and mural paintings to even personal moving expenses.
As the founder and owner of my company, I believe that, if you are looking to start a business, project or whatever, you should be your biggest cheerleader. Getting help is great, but be willing to invest your dollars into your dream and create something awesome that people would be willing to pay for.
If you have a question you’d like Beauty Independent to ask beauty entrepreneurs, please send it to [email protected].