Airgead — decentralized equity crowdfunding platform
Invest in local businesses and sell your equities with ease on a blockchain platform.
A few months ago my friend announced he was opening a coffee shop in Glasgow. He invited a few people to invest in the business in order to help him secure the initial necessary finances. His journey inspired me to invest in a similar local business and so I began to wonder where I could find the information about various small companies opening up and in need of financial help.
In the UK alone small businesses make up over 99% of all business. Only 60% of these businesses make it through their first 3 years. One of the primary reasons the remaining 40% fail is down to lack of proper cash flow and initial investments. This creates an opportunity for regular people, who want to invest but do not understand stock markets, to participate in building small companies and potentially create a steady flow of income.
This is where crowdfunding, equity crowdfunding, and seed crowdfunding platforms, such as Kickstarter, come into play.
I wanted to learn if there are any of such platforms that could help you find and invest in local businesses, what problems these platforms were facing, and if they could be improved.
Initial Research
I started the design process with some initial research into the equity crowdfunding market. I have dived into articles, blog posts, and reviews of crowdfunding and equity crowdfunding platforms. For the sake of this case study, I will refer to both crowdfunding and equity crowdfunding platforms simply as crowdfunding platforms.
Immediately I could identify few striking problems encountered by users on multiple crowdfunding platforms.
- 🙅♀️ Scam startups — plenty of reviews pointed to campaigns that led to nowhere and the backers were not able to withdraw their money or even contact the creators. Platforms like Kickstarter have no legal tools to deal with those situations.
[Kickstarter] allow scammers to be on their page and when those projects disappear without delivering the products, Kickstarter would do absolutely nothing to help you. — TrustPilot UK review
- ⚖️ Fine print rules and regulations — a number of users complained about receiving less money from their investments due to hidden fees and costs. This was sometimes the result of complicated, jargon-filled paperwork future investors would struggle to familiarise themselves with.
- 🤔 No clear liquidity mechanisms — It is often unclear how investors can later sell their shares in the company and how to go about it. Companies like Crowdcube are in the process of introducing the secondary market as a tool for investors to sell their shares.
Not enough info right now about how withdrawal works. —TrustPilot UK review
- 💸 High fees — most crowdfunding platforms, including Kickstarter, take a huge cut of the funds raised by creators. When starting a business every penny counts so even the smallest fee can be a big blow to companies trying to raise funds.
My initial desire was to invest in local business, but none of the services offered location-based searches.
Value Proposition
Decentralized crowdfunding equity platform with the secondary market.
Gosh, blockchain again?
Yes, I know, but hear me out! Blockchain has been a buzzword for the past few years, especially with the latest bull runs in cryptocurrencies. However, a decentralized equity crowdfunding platform could solve the problems fundraisers and backers commonly face.
- 🔐 Security — KYC-compliant investing process with smart contracts. Funds can be released to project owners once benchmarks have been met. Stakeholders can also vote for the future of a project or to accept new investors in the secondary market if one of the stakeholders wishes to sell their shares.
Apart from the new service being made on the blockchain, trust can be built through each startup vetting process. Adding a LinkedIn profile during the registration process can help startup owners decide who to accept as investors, build a proper relationship with them, use their skills to help build a business, and as a result, create more income. - 🧑🏻🤝🧑🏽 Easy liquidity mechanism— peer-to-peer transactions provide more liquidity to the users and can generate bigger interest when selling equities on the secondary market.
- 👍 Clear rules — because smart contracts (pieces of software that automatically execute, control, or document legally relevant events and actions according to the terms and conditions of a contract or agreement) are involved, there are no fine print regulations or fees involved.
- 💰 Tokenization — removing the middle-man allows startups to save on unnecessary fees and use the money to feed their projects. The fees could be introduced to the secondary market.
For local startups, the simple and obvious addition of a ‘local’ search tool will benefit potential investors in their search.
Protopersona
From my initial research and founding assumptions, I have created proto personas of two main stakeholders: business owners and investors. For this case study, I only focused on investors.
Interview preparation
Based on the assumptions and the persona, I have created a list of interview questions that would help me establish whether I am focusing on the right problems.
Finding participants and the interviews
The next step was to find participants for my interviews. Since I had a very limited budget I managed to find participants through equity crowdfunding groups on Reddit, and by contacting few local startups and small businesses through their Facebook and Instagram accounts. Eventually, I managed to contact 3 small businesses and 4 potential investors.
Propotopersona validated
The interviews have mostly validated the proto personas but I have also gained few additional insights during these interviews.
- The young professionals knew about blockchains but didn’t have any idea how it would help secure their investments.
- Two of the investors asked if the platform would allow for the retrieval of some of their invested cash after a certain amount of time if the business they invested in was doing well (see Dragons’ Den model)
Competition analysis
Competitive analysis has one main goal: to understand your competitors’ strengths and weaknesses in comparison to your own and to find a gap in the market. Using the competitive analysis matrix I studied the biggest crowdfunding and equity crowdfunding platforms, including Kickstarter, Indiegogo, Seedrs, FundedByMe, and MicroAquire.
Some of my main findings:
- Most of the equity crowdfunding platforms are in fact just advertising poles. The user can read about the offers but they have to rely on the service to act as the middle-man between them and the company they want to invest in. The benefit of such a solution is weeding out random investors. However, this risks a high fee for the service. That includes existing blockchain platforms such as Bloomio.
- There have been complaints from fundraisers that the funds have been locked within the platform and they were unable to retrieve the money. After a certain amount of time, the money has been returned to the backers (fundraisers have to accept the money before a deadline or they lose the funding). In most cases, customer services were not helpful or simply did not respond.
- Seedrs looks to be the best option for acquiring equities and they are the only ones that have the secondary market up and running. However, the biggest drawback was their complicated and long registration process.
Key Features
For the sake of this case study I have decided to focus on key features that would build the platform and address the problems mentioned earlier:
- Choosing investors (for startup owners) — building trust and surrounding yourself with skillful people that could bring value to a startup.
- Easy equity acquisition (for investors) — easy, similar to the eCommerce way of buying new equities. The user will have to connect to their wallet and LinkedIn account before purchasing any equities.
- The secondary market (for investors)— the investors will be able to sell their equities after a certain time defined in the contract. The equity is put on the secondary market based on the price selected by the selling investor.
Storyboards
Storyboards are a helpful tool to present key features in an easy and clear way so that all stakeholders understand them in the context of the whole business.
Design
With all the information above I could finally dive into the UI and visual part of the project, starting with structure, sketches, wireframes, design system, and high fidelity.
Sketches
Tree testing
I wanted to make sure the structure of the platform, from the very beginning, would make sense to both investors and startup owners. Using Optimal Workshop I managed to tree test the initial website structure. Over the course of 3 days, 20 people tested the website remotely. They were located mostly in the UK, but I included non-native English speakers from Germany, Poland, and Lithuania to make sure that the language was inclusive and easy to understand, especially with some of the blockchain jargon in play.
Wireframes
With users' needs in mind and tree testing done the service started coming to life.
User Flows
Airgead — branding and design system
Airgead means the money in Scottish Gaelic. The green colour represents growth, money, stability, and reliability, with blue representing trust and stability.
High-fidelity prototype
Because of time and budget limitations I looked into ready-made UI kits that I could use for the MVP.
What’s next?
Testing with the original interviewees would come before releasing the platform. There would be a long-haul process from turning the MVP into a complete product. Airgead would have to attract enough projects that would engage potential investors and build a consistent marketing strategy.
But that’s the story for another time.
Hi there! 👋 If you are looking for any help with your projects or just want to talk design, drop me a line at ziemowit.kaczmarski@gmail.com
