Case Study: Hemav, the crowdfunding success of drones
This drones startup has managed to raise €450,000 in just six days during the first investment round with the Crowdcube crowdfunding platform. Under this funding, the founders of this small company have given 20% of it to their 73 new investors.
Drones are in fashion. They are one of the leading new technologies that everyone wants to get behind. And this is what is happening with Hemav, a startup dedicated to offering solutions using unmanned aerial vehicles (drones), which was looking for a formula to allow friends and acquaintances to take part in its project financially. That is how the company got involved in crowdfunding, through a platform that is well established in the UK but that has only recently been set up in Spain: Crowdcube.
This platform offers them a professional solution to taking up this funding option which the company believed would help it keep growing. The first step was to get through the strict Crowdcube filter: only 30% of projects received by the platform are published and enter the investment round. They must have a structure project, with a business plan and a financing plan, and must present their return on investment proposal.
Once they had made it past this filter, they had to prepare in Hemav, with advice from experts in the platform, a professional presentation for their product, and improve their business plan and their financial plan for the next three years. With the security of its investors in mind, Crowdcube verifies that every item of financial data published is correct and true. And after this step, the moment comes to get ready to convince the investor.
A good video, a good claim. Everything is keyed to drawing the attention of small and big investors. “There are two kinds of people in the world: those who believe in the future and those who create it: Hemav”. With this motto and with the help of the following video, they prepared an event at which they convinced a large part of the investors:
The attractiveness of the company's technology (design and development of drones for civil applications) is added to by its experience in the sector (it is the first company to install itself in the incubator of the European Space Agency in Spain), plus, at the core of the startup, its multi-disciplinary teams.
But the biggest attraction for investors were the conditions of the return on investment: its financial plan proposes distributing 5% of after-tax profits in the form of dividends in 2016 and 15% in the following years. In addition, it proposed a minimum return of 30%, making it much more attractive. And still to be added to all this are the tax deductions on the investment, which are 20% on the state portion and up to an additional 30% on the regional portion, depending on the regional government concerned.
With these financial incentives and the good marketing job done by Hemav and Crowdcube, this young company had set itself a target of between €150,000 and €200,000 in this investment round, but, given the success they had in the first few days, they decided to extend the round to €450,000, assigning up to 20% of the company.
A process that usually takes 40 to 60 days, to reach the funding target, was completed in just six days after extending the goal to €450,000. 73 people invested, all of them small investors with an average of €6,000, except for one major investor with €112,500, which became the company's mentor on obtaining financial and policy rights in the company.
In Crowdcube, investors are divided in two groups: small investors, who acquire financial rights in the company that they fund; and major investors, who, in addition to financial rights, acquire policy rights. That is to say, the mentors or advisers, who often need startups to keep developing their business, become what is known as “intelligent money”, explained the platform's CEO, Pepe Borrell.
With 73 new participants entering the company, its legal structure was changed considerably. The crowdfunding platform once again fulfilled advisory and management roles here, in the steps involving a public notary and the commercial register, where all certifications of new holdings in a company must be issued.
Once everything is completed and the legal documentation has been sent to the new investors, who have 14 days to review it and to raise any issues, transfer orders are issued for the investments, which are transferred directly to the startup, without passing, at any time, through the technology platform that has acted as broker.