CrowdIsland: Epic Failure Or Success?
Recently, Echelon Magazine asked our CEO for an interview and he happily obliged. The aim, as we understood, was to share our achievements and learnings. However, we felt that the published version lacked accuracy surrounding our work and understanding of the local startup ecosystem at large. Hence we thought it apt to clarify things a little bit.
But first, a bit of an introduction to what CrowdIsland is. We support early-stage startups fine-tune their business model, KPIs and execution plans. So we’re like an investment bank for startups, helping structure their deal. Once everything’s structured, we help raise funds via an equity crowdfunding model. That is, investors are buying a stake in the startup. Finally, we support those who get funded through guidance and monitoring their growth.
Running a startup is extremely difficult! Board meetings are essentially strategy sessions where time is spent addressing operational challenges. Spending time with the founding team is directly linked to success. So there is no room for an investor to be passive if he or she decides to fund a startup.
But how did we get here? How did we start? Whilst you can get a detailed breakdown here, we will keep it simple.
Initially, we wanted to be a platform for investors to seamlessly invest in startups, quite similar to Seedrs or Republic. But like any other startup, we realised that the actual problems faced by entrepreneurs were different. They needed help in validating their idea and market potential. And they needed guidance in structuring their deal in a manner that would convince angel investors. Furthermore, they required support in being accountable to achieve the promised KPI’s. It became clear to us that we were off the mark in identifying the details of the problem we were trying to solve. Thus, we did the next most logical thing; pivot.
Epic Fail?
Six pivots later, we are where we are today: stable, growing, and at breakeven in 30 months! And having gone through that journey ourselves, we understand what it is like to run a startup. You always start with the aim of doing one thing. But along the way, make certain tweaks to accommodate practical realities. Doing so is an absolute necessity. If you don’t learn and adapt, your business model will fall apart. This is known as Buil, Measure, Learn in Lean Startup Methodology.
Our primary goal is to increase the survival rate of startups. This means a deeper understanding of their challenges. Hence, success to us is based on the total value we create for startups. For an example, Dinusha, founder of Express 418 was trying to raise funds for a year. Pitching his idea at events and discussing with 8–10 investors prior to meeting us. Going through our process and platform, he managed to secure the funds in 2 months. In comparison, Shehani co-founder of JustGoodness closed her funding round in 5 days! So we have improved and fine-tuned our own processes and will continue to tweak and evolve.
Is it illegal?
Starting a startup requires a lot of guts! You sacrifice everything you’ve got to chase a dream. In building a culture that cultivates entrepreneurship, you need to celebrate failures and support each other.
“I have not failed. I’ve just found 10,000 ways that won’t work”. — Thomas Edison
We curate startups based on an internally developed framework and structure deals in a manner that investors can understand. Every startup that has gone through our process have raised funds. More importantly, they are growing! Those who understand the risks in investing startups can sign up with us. Once a startup is Investor Ready, they go live on our website and the investors receive a notification. Those who are interested in taking part in the round can pledge their commitment and we would facilitate the discussion. There’s nothing illegal about that!
Investing in startups is also not for the faint-hearted. The failure rate in startups is high. An investor must be comfortable with bidding adieu to whatever amount pledged. Therefore, we make sure that the investors we bring to the table know what they’re doing. So we educate budding investors about investing in Sri Lankan startups. Share our successes & failures and answer any questions they have.
But I always say, one’s company, two’s a crowd, and three’s a party -Andy Warhol
Why us?
Democratising without understanding the context and simply channelling money can be dangerous. We have no intention of becoming a local Theranos or Fyre Festival. The last thing Sri Lanka’s small startup ecosystem need is unchecked risk-taking fueled by “no-strings-attached” funding. We have opted to go with quality over quantity and we have our reasons for preferring this approach.
First, we have an obligation to be transparent, accountable and responsible for both entrepreneurs & investors. The right early-stage investors can help founders achieve growth. The transaction is just one step in that journey and transaction does not guarantee success.
Second, is to inspire investor confidence. Our curated approach means that we do quite a bit of the due diligence that any serious startup investor would look for. That means building financial models, conducting research, etc. In essence, we can help pave the way for higher quality investors to come on board.
And finally, is our objective and self-interest (let’s face it, we all have it). CrowdIsland’s success hinges on the success of the startups that have got funded. If that is the case, does it not make sense to focus on curation rather than channelling money across a wide spectrum of ideas?
In conclusion, our trademark process of supporting startups “become investor ready” help them go from shaky startup to a stable business, which is what investors also want to see. And we continue to become better at this, which bodes well for the local startup ecosystem.
So are we an epic failure? We fail on a daily basis at something. But we course correct, learn and adapt. We move forward with the startups that we support and the angels that back them. We’re happy to share our insights with anyone who wants to understand the local ecosystem and how we contribute to its growth. You’re also welcome to share your thoughts on how we could do things better! After all, that’s how people and organisations grow.
