GREEN ROCKET

[Sector]

Leveraging the Power of the Crowd to Finance Sustainable Startups

Wolfgang Deutschmann / Managing Director, Cofounder at GREEN ROCKET

Finance

Wolfgang Deutschmann’s entrepreneurial journey started at eighteen when he founded his first company. Ten years later, he’s managing director of ten companies, co-owner of two holding companies and CEO of a social media marketing company. He cofounded the ROCKETS crowdfunding group, including GREEN ROCKET, HOME ROCKET and LION ROCKET, while still at university and has helped over 250 companies find funding and grow their business. While he doesn’t see crowdfunding entirely replacing other financing models, he believes it’s a great tool to overcome the challenges posed by lack of liquidity. “It’s not the cheapest financing compared to banks,” he says, “but it’s a fast, uncomplicated way to raise capital and cheaper than business angels or VCs.” Plus, unlike traditional investors, you reach hundreds of people but don’t have to give them control of your company. It’s a great way to test the market, get feedback and grow your customer base while remaining in the driving seat.

Before embarking on a campaign, it’s important to understand the different funding options, investor profiles and what type of returns you can deliver. If you’re developing a B2C product, reward-based crowdfunding is a good choice as you reward investors with the product they’ve helped fund. Other forms of crowdfunding, however, require you to generate sufficient revenue in a sustained manner to satisfy investors. Lending-based crowdfunding is particularly risky for early-stage companies, warns Wolfgang. Interest rates are high and repayment periods short, so paying investors back can be a challenge for early-stage companies. “We have startups that want to do crowdfunding but when we look at their business plan, our costs and the interest rates, we see they won’t earn anything for about ten years because the payback is too high.” For example, take small, sustainable supermarkets with low initial revenue. “They can crowdfund small amounts, like €100,000 to €200,000 ($120,000 to $239,000), but more isn’t an option until they grow and have higher revenue. A VC or angel is better to get them started.”

For early-stage B2C companies or those looking to finance market expansion or diversification, he recommends equity-based crowdfunding. Here, investors get

Most important tips for startups:

Do the math. Take the time to work out how much you need to raise and what kind of returns you can realistically deliver over time.

Get a foot in the door. It’s easier to crowdfund when you have something of a reputation and an understandable business model. Try to make your first sales and prove your concept first.

- Preparation, preparation, preparation. Doing your homework before the campaign means you don’t have to work as hard to convince investors after launch.

Be a good communicator. Use understandable language and prepare a good elevator pitch. Communication is key to convincing the crowd and keeping investors happy.

Diversify your funding options. Think about which type of financing is most suitable for your business model and stage. Crowdfunding isn’t always the answer, and it should complement, not substitute, traditional financing models.

shares in profit or revenue, so the challenge is convincing them your vision will deliver one day. Abstract ideas are a hard sell, so it helps to have a reputation and something tangible they can understand. “The ideal time is when your product is ready, you’re taking your first steps into the market, and trying to make your first sales.”

Convincing its investor community is something GREEN ROCKET excels at. As the leading platform for sustainable startups in Europe, it’s adept at spotting interesting opportunities in dynamic fields like energy, environment, mobility, health and digitalization. Over the years, it’s run successful campaigns and won investor trust thanks to a rigorous screening procedure involving an experienced team of experts from business, science and the respective industries. “The startup’s business model must represent a sustainable solution to a problem, be able to survive without financing every year and make the world a better place,” says Wolfgang.

GREEN ROCKET supports startups throughout the campaign and beyond with legal, financial and marketing expertise. A thorough analysis of the business model, good preparation and communication are key to a successful campaign. Once a startup is accepted, the marketing team puts together an attractive investor package and determines the ideal time to launch. The main challenge startups face is communicating their business model in a way the crowd can understand. “They aren’t that interested in how your product works. They’re more interested in how you’re going to sell it, where the markets are, what the potential is and how big the company can grow.”

Once these questions are answered and the campaign launched, the investor relations team supports startups and ensures regular communication and reporting during the campaign and beyond. Nurturing its investor community is key to GREEN ROCKET’s success and is what keeps many investors coming back, “Our goal is to grow a crowd that stands together and supports innovative, sustainable business models, again and again.”

About

Part of the ROCKETS GROUP, GREEN ROCKET is the leading crowdfunding platform in Europe for investment in sustainable startups, specializing in energy, environment, mobility, digitalization and health. Offering equity and lending-based crowdfunding through its online platform, GREEN ROCKET is a one-stop shop for startups and provides comprehensive legal, financial, marketing and business support. Since 2013, it has successfully run over one hundred campaigns and raised over €30 million ($36 million) from its 33,000-strong investor community.

[Contact]

[Links] Email: office@rocketsholding.com Telephone: +43 (0) 316 2321 07

Web: greenrocket.com LinkedIn: company/green-rocket-crowdfunding Facebook: greenrocket.crowdfunding Instagram: @greenrocket_crowdfunding

Our goal is to grow a crowd that stands together and supports innovative, sustainable business models, again and again.