Before Kickstarter or Indiegogo — and more specialized crowdfunding platforms like Experiment — which, at least to most people, are what crowdfunding is all about these days, the way to raise money for your startup was to sell equity. To trade stock (ownership in other words) in your company that might be worth a lot of money later, for a smaller amount of money now, so that you could actually go out and build things.

“You might say Kickstarter turns communities into developers, evangelists, and customers… but [equity crowdfunding] turns communities into owners.” — Alex Klein, Kano Computing

With the rise of the project-based crowdfunding a lot of Makers, hoping to make the jump to Maker Pro, seem to have forgotten all about equity. In the process whole industries have grown up around Kickstarter, and how to optimize and publicize Kickstarter campaigns, but this might be about to change again.

Although not the first — MadeSolid, funded on wefunder back in February, for instance — I’ve been looking on with a lot of interest over the last few weeks, as first one, then two, then another of what I’d regard as some of the stand out ‘Maker Pro’ companies here in the UK have turned to equity crowdfunding.

Crowdfunding the Internet of Sounds

The first email in my inbox was from Patrick Bergel, one of the co-founders of It was his round that made me realize that it wasn’t just a company here, or a company there, but that there was possibly a trend here in the making.

We talked to Patrick last month just as their crowdfunding round was kicking off; talking not just about the equity crowdfunding round, but also about Chirp, the Internet of Things, and their new Arduino SDK.

“The reason we went with Crowdcube rather than Kickstarter is that it is much better geared to what we want to achieve, Kickstarter tends to be product focused and not the right venue for investing in a software company.” — Patrick Bergel, Co-founder of

Their £400,000 round on Crowdcube went into overfunding this week.

Making Computers, and Equity

I also recently sat down and talked to Alex Klein — one of the co-founders of Kano Computing — and talked about the funding journey for Kano, from seed money gathered from friends and family, through their Kickstarter, out the other side to their recent Series A, and now their equity crowdfunding round.

My son Alex, aged six, building his Kano computer.

My son Alex, aged 6, building his Kano computer.

We’ve talked to Kano several times before, including during their initial Kickstarter round when they raised over $1.5 million, but amongst the London based startups that have now turned to equity crowdfunding, Kano is somewhat unusual. Instead of choosing a crowdfunding platform based in the UK, they chose to host their round with Quire in the US, and fall under the much tighter regulation required there.

Alasdair Allan: You started Kano with a very successful Kickstarter campaign, but you’ve also taken seed funding, and then later a Series A round led by Breyer Capital. However alongside that round you’ve opened up an equity funding round on the U.S. site Quire?

Alex Klein: We started with a small seed from friends and family to buy 200 Raspberry Pi boards, print our first “Make a computer” book run, and pack them in some hand-folded boxes with bits and cables – we took these into schools, to workshop and test. The kit we took to Kickstarter raised about 15 times as much as we expected and set us up for our 86-country ship, which led to where we are today.

We’ll certainly Kickstart future products, as it’s the perfect community to spark ideas, collaboration, and attention with the right kind of art-science juggling customers. This recent round capitalizes the company for product extension, market expansion, and to build a world-class team.

Quire had the right approach: turning communities into owners. You might say Kickstarter turns communities into developers, evangelists, and customers. The equity crowdfunding is part of the Series – we’ve set aside $500,000 of the $15 million for community, even though the round was oversubscribed, as we wanted our customers’ voices represented in this next step.

[We chose Quire since] we have more customers in the US than the UK at present, although we certainly wouldn’t rule out other forms of crowd financing in the future as our company grows.

However Alex also mentioned that they’re also in the process of talking to a UK based crowdfunding platform, and may be opening a second round of equity crowdfunding on this side of the Atlantic. If you’re interested in that, you should keep in touch with them via their newsletter.

Fix that Thing with Sugru

Of course the most successful of the recent spate of equity crowdfunding amongst Maker Pro equity rounds is Sugru. Now overfunding on Crowdcube — having brought in over £2.6 million — well above their initial target of £1 million.

Jane ni Dhulchaointigh telling us where Sugru comes from.

Jane ni Dhulchaointigh telling us where Sugru comes from.

I, therefore, also talked with Jane ni Dhulchaointigh — inventor and CEO of Sugru — to talk about the sudden rush of UK based startups towards equity crowdfunding, and the possible reasons behind it.

AA: Apart from the obvious differences, how do you see equity crowdfunding as being different than project based crowdfunding?

Jane ni Dhulchaointigh: Equity crowdfunding has some similarities to product crowdfunding like on Kickstarter — the online communication campaign for example is super important, but it differs hugely in the seriousness of the legals/financials involved, and the contract you’re entering with your backers. It’s a long term relationship, where your backers are genuine investors who are interested in sharing in the success of the business in time. We didn’t enter it lightly, in the long-term it is a lot more time intensive than the alternatives but because we’re already set up as a community focused business, with people and systems to cope with lots of frequent contact with our customers, we felt like we could not only cope, but that this could be a really exciting engine to help us grow. So far we have over 1,800 backers in 51 countries, many of whom have invested significant amounts, and we intend to put them to work for Sugru!

Sugru is built on community and it’s all about people power, so equity crowdfunding is a great fit. We have such a strong community that it made sense to draw them closer, and since they’re such genuine champions and advocates, allow them to share in the company’s success with us too. It was a real testament to their loyalty and belief in Sugru that we reached our £1m target in four days, and we’ve continued to build from there since. Normally the campaigns are 45 days long but we’ll probably close it quite a while before that because of how popular it’s been.

AA: Do you think recent regulatory changes — both in the States and here in the EU — have made equity crowdfunding a more attractive option?

JnD: We’ve been watching the equity crowdfunding scene closely as it’s developed over the last year or two. As there’s been so much upfront R&D and market creation with Sugru, we’ve always had to raise investment finance as well as revenues to build the business, but until now we raised it from funds and private individuals. It’s only in the last six months or so that it has really extended beyond seed stage companies to growth stage businesses starting to raise £1m + rounds, and as soon as that looked possible, we decided to go for it.

AA: Do you see the looser regulatory regime for equity crowdfunding here in the UK as an advantage for UK, and EU, based startups?

JnD: It has been a huge frustration for our US community that because of the regulatory restrictions, they haven’t been able to get involved. In all countries except the US, Canada, and Japan, individuals can invest in Sugru while the campaign is open from as little as £10, the only barrier is understanding and connecting with the idea of owning shares in a company to help it grow. It seems that there are changes in the pipeline in the US regulations, and we’re very happy to hear that, we’d love our US community and fans to be able to join any future rounds we might do.

AA: Do you think the recent spate of UK based equity crowdfunding rounds might be driven by lack of VC money here in the UK?

JnD: I’m not sure if Equity crowdfunding is necessarily competing with VCs yet — it’s still very early days, but it’s a brilliant way for young companies to deepen their relationship with their users, especially those with a mission to make a positive difference in some way that your users are passionate about. There’s the potential to genuinely build the business together as a community. 

Be careful though — not all campaigns succeed, in fact, most don’t. Anyone considering this route should carefully consider it from all angles, it won’t be right for every company.

For us it was also a great way of reaching new customers because it’s such early days with equity crowdfunding we’ve found that when our campaign flew so successfully, we’ve got a lot of press coverage from it, and Crowdcube featured Sugru as part of their advertising campaign on the London Underground this June. New people finding out about Sugru and starting to fix things = name of the game. But this is part of being in early on a very new and innovative industry, and again, as it becomes more and more established, that part of it will naturally diminish.

I think it’s going to be interesting to see whether this sudden rush to equity crowdfunding here in the UK — but also to a lesser extent also in the U.S. — turns out to be a coincidence and an aberration, or if this is the start of a major trend, a “Kickstarter moment” perhaps?