Anna Guenther On How To Raise Money As A Social Entrepreneur

Anna Guenther is the co-founder and Chief Bubble Blower of PledgeMe, New Zealand's first crowdfunding platform. Since launching 5 years ago, over 1,200 creative, community and entrepreneurial campaigns have raised over $20 million through PledgeMe.

Anna has also worked for the New Zealand Government, MIT and Harvard, and completed her Masters in Entrepreneurship with a focus on crowdfunding.

In her day job, she focusses on building the crowdfunding community in New Zealand - and is constantly amazed by the passionate people she gets to play with. Half Kiwi, half American, she has travelled around the world for work – but always comes back to call New Zealand home.

Anna discusses the world of crowdfunding, sharing insights and advice for entrepreneurs looking to raise investment funds, whilst making a positive impact on the world.

Highlights from the interview (listen to the podcast for full details)

[Tom Allen] - Could you please share a bit about your background and what led you to your work in crowdfunding social enterprises through PledgeMe? [1:54]

[Anna Guenther] - Well, I started off my career in grants administration randomly. It wasn't anything that I learned anywhere. I studied English literature, but one of my roles in university was in grants and I ended up getting a few different roles in grants administration, and ended up working for the New Zealand government.

While I was there, I was helping them make assessments around companies and their export development grant space. I really loved the work, but also found it a little bit frustrating making this decision just purely based on the information provided, and just got me really interested in different ways of funding.

When I finished up with the government I realised I had a peak of what I could do, and decided to do a Masters. My Masters was the entrepreneurship Masters, and my thesis was crowdfunding.

Is that's what led you into the project?

Yeah. PledgeMe was actually my thesis. PledgeMe came out of my thesis mainly because I was just so excited about what was happening overseas and wanted to see if we could do it in New Zealand.

I met a guy who was building a back end for PleadgeMe and decided to work together, launched it in the product space and did that for a few years. We got licensed to do equity crowdfunding and crowdfunding under the financial markets authority in New Zealand. I think the thing that excites me the most about that though is really democratising capital. It's providing companies that wouldn't traditionally get finance investment.

Which includes social enterprises. Social enterprises historically struggled so much raising money, and for a bunch of reasons. One of them is that they're not really looking to maximise profit.

There's not the same sorts of returns for investors. If you're trying to seek investment you probably want it to be from people that love your product or love your company, and that might not be in more traditional investors.

We've seen that equity crowdfunding has really enabled social enterprises to raise money especially in New Zealand. But I'm really excited about what's happening here in Australia.

We're sitting here at the capital of Brisbane where you've been brought over by the government essentially on a grant correct? [4:01]

Yeah. Queensland has a really progressive programme called Hot Desq, and that's where they basically pay for entrepreneurs to move here for six months. We were really lucky to be selected for the programme, and really lucky that it also aligned perfectly with the timing for the legislation changes over here. Australia had changed legislation on the twentieth of September to allow equity crowdfunding.

Tell us a little bit more about PledgeMe. How does it work and what makes it distinct from other crowdfunding platforms? [4:31]

PledgeMe is a crowdfunding platform based in New Zealand, but now also based in Australia. It offers three types of crowdfunding, which is different from a lot of other platforms. We offer project based, which is like Kickstarter. Equity based where companies are issuing shares to their crowd, and then lending. They're borrowing money off their crowd and paying it back at interest rates, and repayment terms as I said. We've been doing that in New Zealand, and licensed in New Zealand to provide equity in London, and now we're looking to be licensed in Australia once we applied for a licence.

But we're different. Partly because we offer the three different types of crowdfunding. But also because we really value people's crowds.

We think that makes way more sense than trying to get money from people you don't know, because we get money from your crowd. You're strengthening existing relationships, and they are way more invested in your success.

Your crowd could be your family, your friends, your professional networks, your customers. We just all focus on that. We think it's quite different from anyone else.

Fantastic. For all the budding social entrepreneurs or social innovators listening what advice would you give to them about launching their own crowdfunding campaign? [5:39]

I think anyone thinking about crowdfunding should think about three different parts of the campaign:

One is you need to have a good crowd.

We don't decide if they're good. It's up to you to see if they're engaged with what you're doing.

The second C is you have to be good at communication.

You have to be able to communicate to that crowd that you have what you're doing, and why it'd be great if they got on board, and what they're getting in return.

The final C is if you're doing an equity campaign you need to have a good company.

I mean it doesn't mean you're doing good, but it means you really understand how your company operates, what your revenue model is, what your growth plans are or impact plans, and how that money coming in is going to help you achieve that.

I think often we in social enterprise focus so much more on the first two, but not so much on the last one, and you still need to be a sustainable business. You need to know that you can cover your costs through revenue.

What other typical areas that people make then when they start a crowdfunding campaign?

There's a few typical areas, but one is just expecting that it would be a crowd in a cloud. People seem to think that crowdfunding is this magical place where...

Where money appears!

Yes. They're just waiting to throw money at me. I mean there are people that are watching, but they're not going to get on board if you're not validated through crowd first.

People really need to be clear that your crowd is the most important at least to start.

So that's one of the typical areas, and then another one is not really thinking about the communication. Making sure that people understand really quickly what it is you're doing and why you need the money. I think people often think they need to write a 70 page business plan.

They probably should have a pretty comprehensive business plan, but your crowd is probably not going to read that.

So being able to communicate really quickly what it is you're up to and why you need funding is important.

Can you tell us about a couple of those successful projects that have been crowdfunded the PledgeMe? [7:32]

Yeah, totally. One of our recent successes on the equity crowdfunding front was for a social enterprise called Ethique. They're a solid hair care business. They make great shampoo and bars.

The whole point is since it's in bar form, the packaging is fully compostable, and they're reducing plastic waste. Brianne, the founder, thinks it's dumb that you have a bottle filled with water, and you go into a room filled with water, and she's stopped over 200,000 bottles from going to landfills so far.

The reason she wants to do this is obviously as many of you know by 2050 there's going to be more plastic in the ocean than fish. But when she did her last round through us, she raised half a million dollars in 90 minutes from the public.

She opened it up a little bit earlier to her existing shareholders, but once it went to the public, which is her customer base it closed in 90 minutes.

She just has this crowd of customers that love her purpose and love what she's doing. It's just beautiful. They just really got on board. They got a 10% discount on her products, and they brought a piece of the company, which is doing some pretty amazing things.

Having recently arrived to Brisbane with the Hot Desq programme, what have been your first impressions when trying to set up here, and what could be improved in Brisbane, Queensland or Australia in the startup innovation ecosystem? [8:41]

What I found is everyone is super friendly. I'm really loving Queensland for the fact that people are super supportive, super helpful, and they actually just want to sit down and have a conversation, which is great.

Areas for improvement ... I mean one, one thing that I think is an area for improvement, and I'm doing something about it is setting up an Unconference. There's so many people doing amazing things, and they're sort of collecting around certain sectors. But what I love is when there is spaces where there are people across sectors collaborate and see what they're doing, and support each other.

This Unconference concept is the idea of going away for the weekend with 100 people that are just building a better future, and how can we do that together.

From a social enterprise sector perspective, I mean you're being in this sector now for a little while, how have you seen it change over the last few years, and where do you see it heading? [9:38]

I'm so happy that Social Enterprise actually seems to be a thing that some people know about now. I feel like five years, six years ago it was a concept that was completely under the radar except in places like Scotland.

Or maybe even there it was under the radar. But now I feel like people say social enterprise and at least 50% of the time people don't think it's social media that you're talking about. Especially in New Zealand I think there's a growing awareness, and a growing connected crowd of people that are doing it.

Having recently hosted the Social Enterprise World Forum, that was obviously a really nice boost for New Zealand...

Yeah, it's so exciting. Just to see all these awesome people across the world and New Zealand just getting together, and sharing their learnings was pretty special.

You've mentioned Scotland as one of the leaders and we've talked a little bit about New Zealand and Australia. Which countries do you think is really leading the charge when it comes to social innovation, Social Enterprise, and just business for good? [10:38]

I think there are companies across the world that are doing really great things. You look at Patagonia... there's a bunch of companies in New Zealand.

I think that Scotland is sort of seen as the grand daddy of Social Enterprise. They've been doing it in a really concerted way for a long time.

I think that every country can do it their own way though. I don't think we always need to just go by the definition set within a different cultural context. But yeah, definitely Scotland is one to watch if you wanted to see how one country has done it.

I'm really intrigued by America at the moment though with all the B corp stuff that's going on.

It's certainly a growing movement.

Yeah, and I know that's here in Australia as well. There's a lot of B corps. Are you B corp?

No, not yet.

Why not?

We're looking at that option for the future.

Okay. I'm just really intrigued because we've applied, and we haven't finished the process yet.

Yeah, it seems like quite a large process.

It's a huge process, and it actually is slightly uncomfortable. They really push you on some stuff, and some of it is good stuff, but sometimes it's just like "Come on. We're working really hard here. Why are you making this even harder?" I get you have to make sure that people are social watching things. But at the same time if it's so complicated to become part of the club, is it... I don't know. Sometimes I'm just like "Ah, I'm just going to keep undoing my stuff and not worry about a label."

Completely. Going beyond crowdfunding what advice would you give to other entrepreneurs who would like to use the business models to make positive social impact, but at the same time make sure that this is a sustainable model to actually roll it out and make that happen? [12:21]

I guess one tip is don't be scared of money.

I think that as social entrepreneurs, often we sort of inherently think that money is a bad thing. It's not. It's a tool, and it's a way to measure things.

I think that we just need to be really clear that this measurement tool is helping fund the impact that we want to have, and being really clear on your revenue model, and make sure you can have the impact that you will have.

The other thing is just being really clear on the impact that you want to have. What is it that you want to see happen in the world because your business exists, and how are you measuring to make sure that's happening?

How are you also measuring when there's not any negative externalities from what you're doing as well?

Crowdfunding-tips-for-social-entrepreneurs

Definitely. You've spoken about Ethique as a successful company. Who else exists in the New Zealand ecosystem at the moment who's really turning heads? [13:16]

Oh gosh. We got a lot of different social enterprises that I really rate. We've got a campaign running at the moment for a social enterprise called Kilmarnock. They are providing job opportunities and education for people with disabilities.

And they are doing it in a really beautiful inclusive and celebratory way. They're raising $50,000 at the moment for an education programme that they're running.

We have the likes of Eat My Lunch. They've run two campaigns through us in the past. They're a buy one, give one model, so for every lunch box through them they give a lunch to a child in need because 32% of children in New Zealand live in poverty, which is insane.

That's huge.

I know. Yeah. People query the definition of poverty, but I'm like, "If we're having to query the definition of poverty we're already doing something wrong."

But yeah, so they've been doing that for the past ... Over two years now.

They raised money through us twice once as a project campaign where they offered rewards, and once as a lending campaign where they offered loan notes.

They raised over $800,000 in their launch bond round last time, and people do question their model. Is it really fixing a systemic issue?

I guess my response to that is maybe it's not, but at the same time, feed the f*****g children. If they need to be fed, this is an immediate response to that while the leaders of government work to change this sort of reason that children are living in poverty.

Anna, there's been some great insights today. To finish off, could you please share a few really great books that you'd recommend to the listeners? [15:05]

Oh, I love recommending good books. Obviously, anything by Adam Grant. He is a Professor of business, and he writes a lot about ... I don't even think he calls it Social Enterprise does he? Have you read his books?

No, I haven't.

Yeah, so he's written two books that I really love. Give and Take.

And The Originals. Give and Take is proving that givers come out ahead of takers in life around the business context, but he also goes into other areas and proves it with stories and research. Lots of academic research. Then his second book was called The Originals, and it's the idea that ... How do you bring an original idea into the world, and what are some tips and tricks to do that? Both again based on academic research and stories.

In both of them, I've just come away with such a wealth of knowledge around how to think differently about things.

He's great. I have a tendency to not read business books. I read young adult dystopian fiction to make myself feel better.

It's a good way to turn off your brain in a way that's not ... Yeah, super work related.

We recently spoke to Sandy Blackburn-Wright, and she said the same about when it's your time to step away from your work, get away from the business books. Rest your mind, recharge, and then come back and right down to just saturating yourself, so it's a common thread. [16:23]

Yeah. You can't saturate yourself all the time. But sometimes it's really good to read about business, and what other people are doing, and how they're doing it. Yeah, The Hard Thing About Hard Things. It was a founder and investor just sharing some of these experiences, and it goes through the struggle of being an entrepreneur in detail. It makes you feel a bit better about everything.

The journey that you're on... the rollercoaster!

No one knows what they're doing. Some people know a little bit more but they still get in situations where they don't know what they should do and there's no right answer.