Sugru - investing in startups carries risk!


(User # 93) #1

Not sure if everyone has seen the above story that’s been doing the rounds today, but it’s a stark reminder that investing in start-ups always entails a high level of risk. I say that after having happily invested an amount in Freetrade I am comfortable losing, despite having confidence in the Freetrade team and the product itself being a success.

However, Freetrade team, any words of solace for those that have invested and / or words of persuasion for those still sitting on the fence or even the naysayers?

Above story is a good opportunity for you to have your say, especially during this ‘cooling off’ period of the crowdfund


#2

Here’s a company I invested in back in 2015 …


#3

But here’s another company I invested in back in 2016 …


(Viktor) #4

@Lodgimus I didn’t know the company, but having read the article now, I think there are quite a few differences.

Freetrade is a financial services company authorised by the FCA. We are a member firm of the London Stock exchange. We are approved by the HMRC to provide ISA.

You can see the onboarding flow as well as the first live trade executed on our backend systems here. Our iOS app is in the App Store, and our engineering is making progress to finalising the last tasks before we can add customer accounts (other than @adam’s and accounts for other team members :blush: )!

Our rapidly growing waitlist and our community speak for themselves.

That said, startup investing carries risks to your capital as well as potential rewards. Do read the Crowdcube Risk Warning, so you make a considered decision!


#5

The only risk I care about is where to stash my millions in 3 years :+1:

(But yes point taken)


(Viktor) #6

I heard about this! I know a few of our community members invested in Sugru.

It sounds like their thesis on marketing was strong. The key sentence for me is

FormFormForm made the decision because it would need significantly more investment than anticipated to drive awareness of the product.

Now, marketing and customer acquisition specifically are not things to underestimate. I have a few Medium posts coming that will dive into those topics. In my mind customer acquisition is an existential question for startups.


(Rob Nicholson) #8

Freetrade will also have £3m+ in the bank in a couple of weeks, which should help somewhat! :moneybag: To put that in perspective, the product which is very nearly ready was built for less than £1m!


(Vladislav Kozub) #9

Consider Crowdcube’s commission as well, that is about 5% unless Freetrade is on special terms.


(User # 93) #10

I asked crowdcube about this when requesting whether they will add a secondary market. As Seedrs charge 7.5% but they offer a secondary market, 7.5% is a lot but the extra liquidity is a happy trade off for most start-up investors. Crowdcube advised the below in regards to what they charge…

We charge a success fee of 7% (exc. VAT) on the amount the company successfully raises. Payment processing fees also apply. These fees are deducted by Stripe, Crowdcube’s payment provider, when the funds raised are transferred to you upon the successful completion of their raise. The payment processing fees vary depending on which country the payment card is registered in and are 0.5% for the UK, 1% for Europe and 2.9% for the rest of the world.


(Vladislav Kozub) #11

@HannahCrowdcube, could you please clarify this one? My card would be classified as “rest of the world”.

My thinking was that as per https://www.gov.uk/government/news/card-surcharge-ban-means-no-more-nasty-surprises-for-shoppers, charges are not allowed in the UK and EEA from January 2018.

As per “rest of the world”, Regulation 4 of The Consumer Rights (Payment Surcharges) Regulations 2012 would have to apply.

Thank you!


(Hannah) #12

Hello @Vlad, these charges are only incurred by the company that is raising funds. We do not charge any kind of fees to investors for making an investment.


(Vladislav Kozub) #13

Thank you for responding. @Rob / @Viktor, any chance you could advise on the following?

Does it mean Freetrade is charging additional payment processing fees?

Thanks!


(Hannah) #14

No, Stripe (the payment processing service) charges Freetrade for each payment taken. No fees are charged to investors from us, Freetrade or Stripe.


(Vladislav Kozub) #15

Okay, so dumb question coming now:

If I invest £10 with a card registered in Antarctica, I, as an investor, will have received all shared equivalent to the value of £10 but Freetrade will only get =£10-CrowdcubeFee@7%-StripeFee@2.9%. Am I correct?

Thank you!


(Hannah) #16

Yes that is correct :blush:


(Viktor) #17

Adam just shared this VC article on Sugru: https://medium.com/@robinklein/sugru-an-investment-failure-but-worldwide-success-1948774db579

Interesting take-aways for me:

we lost most of our investment

So they recouped a little bit of it - VCs might have had different terms than crowdfunding investors? :thinking:

To build mainstream awareness for Sugru, along with mass retail distribution, takes much longer, and requires more investment than any of us imagined.

To me, marketing really makes or breaks startups in 2018.


#18

It’s up to all of us to get Freetrade out there and known (and adopted) … but I might leave the bulk of the marketing to you guys :thinking:


(Viktor) #19

That’s fine. :+1::muscle:

My point was more about how much startups tend to underestimate marketing.

:nerd_face: Somewhat related: andrewchen.co/paid-marketing-addiction/ :nerd_face:


(Vladislav Kozub) #21

Make sure to return these 10% back to the taxman :wink:


(Vladislav Kozub) #23

You knew what I meant! :yum: