Everything you need to know about startups and crowdfunding
The Cryptonomist interviewed MamaCrowd CEO Dario Giudici to find out everything there is to know about startups and crowdfunding investments.
What are the active campaigns at the moment?
We are currently hosting campaigns from:
- Etilika (E-commerce specialising in the sale of wines and spirits. It was born in 2019 and is already among the main Italian players in the sector).
- ProfumeriaWeb (Italy’s no. 1 beauty products e-commerce, with 2020 sales of over €8M and a growth plan aimed at listing on the stock exchange within 2 years).
- Lifegate (for over 20 years, a reference point for sustainability in Italy with a community of 5 million „lifegaters“).
- Acquainbrick (producer of good water in a completely recyclable and customisable container, made from around 70% vegetable raw materials).
All of them have already exceeded the minimum collection target, so we can consider them successful campaigns.
What are the characteristics of a successful startup?
Defining success is quite a difficult exercise when it comes to startups. Getting a product on the market and selling it is a success, funding your Bitcoin Evolution growth by bringing investors on board is a success, growing the value of the company over the years is a success, getting it listed on the stock exchange or being acquired by a bigger player is also a success.
There are so many variables at play in business, but I am convinced that the most important feature is people. When the team is good it will know how to navigate through adversity and take advantage of opportunities, or quickly change course when necessary. Then the bigger the target market, the more possibilities for growth there are. So in order of importance I would say: the team, the solution, the market.
How important is marketing?
Knowing how to communicate is fundamental in the life of a company, and in particular when you want to address the market through a crowdfunding campaign. The best campaigns are not necessarily made by the best companies, sometimes even the ones that are the best at communicating and creating engagement. But it’s something that can’t be improvised, and it’s usually best done by companies that have always been attentive and focused on engaging their target communities.
Have you ever thought about engaging with crypto companies by doing token sale?
We have been looking at the application of blockchain technology to our business for a long time. I think the time is ripe to apply it successfully to the placement of financial instruments. At the regulatory level, there are still steps to be taken in some jurisdictions, but I believe we are close to identifying solutions that can make processes more efficient while maintaining the necessary safeguards to protect companies and investors.
What are the pros and cons of crowdfunding versus ICOs?
I think they are two similar phenomena, but also very different. The crowdfunding that we do is the collection of risk capital, those who invest become partners in the companies they finance. ICOs, at least those that have utility tokens as their object, don’t have that characteristic, so I think it’s very important to understand the economics of the token and assess the risk, because the link between the value of the company and the value of the token may not be strong.
In the case of crowdfunding you are at least certain that the value of the units or shares will reflect the value of the company you have invested in.
On the other hand, tokens issued in the ICO phase are, to date, more easily tradable, but I believe this is a transitory situation that will be resolved relatively quickly.
What is the success rate of startups?
My previous answer applies, it depends on how you measure success. In general though, if we talk about those that have done a crowdfunding campaign with us, the interesting fact is that 95% are still active, at various levels of growth, although we have to consider that the first campaigns were done in 2016, so it’s still a bit early to talk about results. The selection work on our part is important, and the companies that are published are a small percentage compared to those we analyse, so all in all these numbers should not be surprising.
What should a user consider if he wants to invest in startups?
He must be aware that this is a risky asset class, but also that the risk can be greatly mitigated thanks to diversification. In other words, rather than trying to guess the successful startup, it is the number of companies you invest in that counts. Some may fail, but those that grow can increase their value so much that they more than compensate for failures.
What is the average number of successful investments?
I think that in two or three years we will start to have more useful data for this answer, for the moment we can only say that the „survival“ data of startups that are successfully crowdfunded is very encouraging.