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Successful Fundraising Using LinkedIn – Goshido Case Study Of “Crowd-Funding”

We often hear of success stories where jobs are created, companies are formed through strategic alliances and funds are raised for high potential start-ups (HPSUs).  Some of those successes had solely utilised social media and social networking. I remember a case in 2010 where one tweet resulted in an Irish businessman becoming a Director in an Irish company.

Frank Hannigan

2010 was also the year Frank Hannigan became Executive Chairman of Goshido, an Irish Software Start Up company.

  • Frank single-handedly used LinkedIn in order to raise $230,000.
  • This all happened in eight days.

Goshido allows teams to break projects into their moving parts, and ensure that the team can keep all those moving parts moving. The software embraces the principles and concepts that drive the most powerful methodologies in current use to ensure that organisations collaborate well.

Seed Funding the Goshido way

Frank sent out 700 messages to potential investors, which resulted in over 200 responses within a week.

Frank comments, “Attracting investment is all about trust, LinkedIn is the largest collection of trust agents on the planet. We reduced the cost and time involved in fundraising 75% by using LinkedIn as our funding vehicle.”

I got in touch with Frank and asked him about the experience, and any advice he would have for someone thinking of a similar venture:

What enticed you to look to your online network for this funding?

Really it just seemed natural – LinkedIn is a destination for people who want to do business. It was an efficient way to reach my business network. I would not have felt cool making the approach on other social media platforms.

How did you decide to raise the money, once that decision was made?

Our plan was to raise the money from 10 people each putting €25k on the table. It did not work out as neatly as that – but it was close enough to the plan. We got BES (Business Expansion Scheme) status – allowing us to offer investors 100% of the upside with only 58% of the downside.

Why specifically LinkedIn?

I have a strong network – I think it was around 700 then – the network is now 1,675, and those 1st connections have themselves 1st connections of over 461,000 people, and in turn their 1st connections amount to 10.65 million people. That’s a hell of an audience for a strong investment proposition.

What was the response like?

It was staggering. The immediate response from 1st connections and those who they recommended the investment to meant that we almost completed the round in just over a week. The plan was to complete in 12 weeks – so that is a remarkable outcome.

The response from twitter and traditional media in the following 12 months was amazing too. What we thought was pretty straight forward, turned out to be one of the first fundraising events in the world to use LinkedIn.

Did you get all the funding your were seeking?

Yes we raised €450,000 in total.

Is this a system of fundraising you would recommend and why?

Yes I think this is the way funding will increasingly happen for seed and early stage rounds. At these rounds it really is about trust in the team – there are very few other metrics to consider. Professional investors don’t really offer that much of an advantage at this stage. Speed is key – crowd-sourcing, if executed well, can deliver that speed.

What is your key message to start ups or existing organisations who may consider raising much needed funds in this way?

Be compliant! Washington has dramatically reduced SEC (Securities and Exchange Commission) controls on crowd-sourced funding in 2011. They protect investors as much as they can. however they are relaxing the rules around crowd-sourcing finance.

Goshido offered information to Irish taxpayers – but anyone using Social Media should be very aware of the risk of falling foul of the SEC. It is still a good idea to have both a lawyer and an accountant advise you in order to ensure you break no laws and to optimise the tax efficiency of your transaction.

Thank you Frank, for sharing your story with us. Check out this article for a short piece on the recent changes in crowd-funding in the USA.

Elaine Rogers is a Business Trainer, Coach and Writer. She takes pain away. She helps soothe the rough and tumble of running a business through education, information and coaching. And a bit of entertainment. Elaine hangs out at The Smart Train She provides online training and coaching solutions in the areas of MS Office Skills, Business Skills, and Soft Skills. She also provides exclusive content for her ever growing email list.

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  • Hi Elaine, I recently had the pleasure of having Frank speak, about how he uses LinkedIn at a social media skillnet event I was facilitating in Cork. He was simply brilliant! One takeaway was how he planned for success when using LinkedIn to raise money for Goshido, when people responded as they did, he had the correct follow up material ready and waiting. The point is that he developed a well thought out strategy including a hugely successful outcome and that’s exactly what he achieved.     

  • Any strategy needs to include the all-important follow up. No point in letting the trail just fizzle away into nothing after all the hard work of setting it up in the first place. Thanks Niall, I agree completely with your comments.

  • THanks F

  • Thanks Niall, you are too kind 🙂
    It’s been a very interesting experience, both in terms of development and marketing. The app is a great fit with our business and we’re especially looking forward to how people use it from the start of the new tax year in January.
    It was great too to hear Helen speak at the accountants conference, even if I probably shouldn’t have surprised her so!

  • Great interview Helen and like Niall below, I think it is a really clever idea (I hate filing receipts) and love the CRM idea too.  I need an app for my VAT returns now though!

  • Thanks John, credit must also go to your tech team as It looks fab and is easy to use. Well done all! 

  • Anonymous

    Really fascinating Helen and it will be so interesting to see what happens over the first year of offering his App for free. I can see John’s thinking about why he is making it free – wider reach and (as long as it’s used) a constant potential source of leads back to his business. 

    I wonder if it would be worthwhile creating some tests of free and not free offers to different but comparable segments? Could it be that the conversion rate for those who place even a small value on an App would be higher, even if the take up levels for the App may be smaller?  

  • Elish Bul-Godley

    Greetings Bamidele & Welcome to the blog group. That was a very useful post which touched on issues and the ” type of post” we have all been observing and discussing for some time here. I especially like the point you made distinguishing resource posts from tips and the whole tips list thing has been an over-saturated part of the business blog sphere and it is becoming apparent the content is getting more pithy and dilute.

  • Nice list. I definitely think the speed issue is important. I will click away if I stumble on a site and it loads really slowly.

  • Bamidele Onibalusi: Your post made me realize once again that I have to present my services in a more “packaged” way, in order to generate the right leads. But on the other hand… 😉 This is a topic that I will write a post on, drawing my 11 years of blogging and how it have resulted in business according to the referral process (know, like, trust, ref., profit). Dr. Ivan Misner created the V.C.P (visibility, credibility and profitability) process that is taught at BNI.

  • Bamidele, I really enjoyed this post, a lot of takeaways here.

    A lot of businesses, especially small businesses find this “blogging” and “content marketing” thing a bit difficult to get their head around and generally aren’t easily sold on the benefits.

    The proof is in the pudding as they say because when my agency launched a new service (new brand and new website too) .. our first paying client came off the bat of a single article that I wrote on the blog of our new site – just so happens that we’ve got a great relationship with this client now that’s been very mutually beneficial and they’re still a paying customer now.

    The key is getting your content in front of the right people and the resource posts that you mentioned are an amazing way of doing that.

    Especially when you reach out to the people/companies that you have mentioned via email or social media and ask them to share.

    Thanks for a great read!

  • Welcome to Tweak Your Biz Tarun. Preferring online shopping myself I’d welcome any improvements in actual stores to entice me to use them. You’ve made some great points and I look forward to your next post

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