Case Study: CarCloud drives away with over £426K in 2nd Seedrs round

“If someone is going to embark on a crowdfunding journey, don’t do it without ISQ. Even if you’re doing it for the 2nd, 3rd, or 4th time around - make sure you sign up again. Thoroughly recommend ISQ.” - Geoff, CarCloud

Client: Car Cloud - second round

Platform: Seedrs | Republic Europe

Campaign target: £325K

Final amount raised: £426,321

Overfunding %: 129%

Number of investors: 165

Pre-money valuation: £6,3M

Final equity transferred: 6.24%

Tax relief: EIS

Business summary: CarCloud’s mission is to achieve the lowest possible monthly car costs for the UK’s 33.5m drivers.

Bullet highlights:

• 90k+ & 110k+ drivers joined our market test phase
• 2k+ app reviews with average score of 4.75 stars
• Secured revenue generating contracts: Experian & MSM
• Customer acquisition partnership: Reach Media

Steph from ISQ interviewed Geoff, CEO of CarCloud about how the campaign went, here’s what he had to say…

What was the best bit/what went well?

“The purpose of Seedrs is to broadcast your business and go through a “business workout” inc terms of Due Diligence, creating a tighter communication strategy about your business and updating your traction story. It’s about putting your head above the parapet and thinking about where you are rather than working on the day to day stuff.”

When the ISQ team first started to work with the CarCloud team on this second raise, we had a conversation about traction and how important it is to communicate that effectively in the second round, and to show existing investors and potential new investors why it’s worth re-investing. The CarCloud team turned that traction into a much more effective social media strategy which really helped the campaign gain momentum.

Geoff also said he benefited from the “ISQ support, structure and discipline.”

What were the key challenges you encountered whilst crowdfunding?

During the previous round, the crowdfunding landscape was very different as it was prior to the cost of living crisis. CarCloud’s first round reached 145% in overfunding from 369 investors. This second round only 165 investors and 129% overfunding. The main reason for that is the state of the economy and market conditions, as high interest rates have reduced the amount of free capital that people have to invest. This was a challenge for the team, so they had to get more creative in terms of the marketing and launch strategy.

Running a down round was also challenging to get the messaging right and convince the previous round investor cohort that it’s worth coming back for round 2. In highsight, Geoff says they “should have structured the proposition to not be a down round, so begin planning earlier”. It’s important to consider how early conversations with bigger ticket investors could influence how smaller ticket investors behave down the line.

Did you gain any new contacts or opportunities from the raise?

During CarCloud’s first raise, they secured a few new partnerships off the back of running the campaign. This time around, the benefits were more around the acceleration of VC investor conversations that are continuing post raise, which wouldn’t have happened without being live on Seedrs and creating all the marketing material required. Some of this could be subliminal, as lots of content was pushed out on the founder’s Linkedin profiles, which certainly helped to gain brand awareness.

The optics of the campaign really helped with new investor conversations too, by getting into overfunding quickly and raising £100K over the minimum target, this has given investors confidence, as well as the justification in the decreased valuation and share price.

Top Tips to share with new crowdfunders?

“Investors like EIS investments and if they have available capital, and if you have a differentiated, compelling proposition, which clearly summarises the value, then you’ve still got a good chance of having a successful crowdfunding campaign in the current market conditions. Many businesses are crowdfunding successfully at the moment and there are a load of benefits from “taking your business to the gym” for 4 months.”

Benefits of Crowdfunding?

• Exposing yourself to a broader audience
• Being more disciplined with business communications to attract enthusiastic investors
• Setting up for wider conversations with institutional investors

We definitely agree that CarCloud’s visual marketing assets were much improved this time compared to their last round. They’ve got a strong team in place now and are ready to expand globally. We look forward to following their progress.

Written by Steph Yeates, Operations Director, ISQ