Success stories: Bookdealer's crowdfunding

Bookdealer is the marketplace for independent bookstores that in the fall of 2022 conducted a successful equity crowdfunding campaign to finance its growth.

It was created in 2020, during the pandemic, to support independent bookstores by giving them a centralized marketplace through which they could reach end users even without having their own ecommerce and without relying on large distribution players.

Leonardo Taiuti, translator, publisher and sole administrator of Bookdealer, told us about his first-hand experience, from which it emerged that the path to a successful crowdfunding campaign was not easy, but brought many satisfactions.

Why run a crowdfunding campaign

When Bookdealer found itself, like all startups, in need of raising capital to grow and improve the quality of its business, it screened the options available to it:

• bank loan
• search for big investors
• alternative finance.

The first two options were difficult to access for a small entity like Bookdealer, which moreover operates in a field, that of books, that in Italy does not see rivers of gold flowing within it. Alternative finance, therefore, seemed the best option for a project that was itself quite alternative.

Specifically, Bookdealer has identified crowdfunding as the natural evolution point of its path, born from below to pose as an alternative to large online stores. It is a project with a distinct social component and one whose cultural nature already physiologically stimulates the involvement of users as protagonists as well as customers. Taking this involvement to a higher level seemed the right continuation of Bookdealer's tight business roadmap, a roadmap that required finding new resources to be taken forward.

Choosing equity crowdfunding: risks and fears

Once crowdfunding was established as the best option, it was necessary to identify which type was best suited to that business.

From the confrontation with other startups, Bookdealer's partners perceived a widespread fear: the risk of excessive share dilution with equity crowdfunding, which could result in a loss of control over the company.

This is a very common fear, based on a partial and inaccurate idea of the mechanisms of equity crowdfunding. While it is true that enlarging the shareholding effectively results in a dilution of shares, it is also (and more importantly) true that it is the company that decides how much and how to enlarge the shareholding, having different types of shares and many ways of managing investors that allow it to maintain complete control. For example, it is possible to group all crowd investors into a single stakeholder, through a corporate vehicle or other administrative-bureaucratic means.

Bookdealer did not have this fear, because they had a modest fundraising goal, which would result in the sale of a limited number of shares: crowdfunding is totally customizable. On the contrary, the entry of new members represented a chance for them to get to know interesting and useful people, to engage with subjects more or less directly involved in the world of Bookdealer.

The team's real fear was the most legitimate fear when launching a crowdfunding campaign: the fear of not reaching the minimum goal, then putting oneself out there publicly and then making a fool of oneself. Because crowdfunding is this: it is publicly declaring that you believe in a project, to the point of asking people for money to support it, and a bad response from the public turns out to be an indication of poor credibility. How to avoid it? With proper preparation.

Before the campaign: the startup accelerator pathway

Bookdealer's road to equity crowdfunding campaign has been a bit peculiar. While they were already starting to make arrangements with the Mamacrowd platform to launch the campaign in April 2022, Bookdealer was selected for the accelerator program of Social Fare, a startup accelerator in Turin, Italy. The program, however, would launch in April 2022 itself.

The Bookdealer partners were faced with a difficult decision and decided to take the risk of postponing raising capital to invest more in the meantime, which they did not have at the time. After listening to the advice of various professionals and finding some investors, they decided to embark on the path of acceleration, and time proved that it was the right choice.

In four months they have acquired valuable knowledge and skills for business in general and for the crowdfunding campaign in particular. For example, they learned how to prepare an effective business plan and income statement to present to investors.

Bookdealer's equity crowdfunding: critical issues

Some hiccups in the production of the documents needed to start the crowdfunding campaign have delayed the start of the work, confronting Bookdealer with 3 main critical issues to be addressed:

• little time for campaign preparation
• minimum threshold too high
• small advertising budget

In order to achieve ambitious goals with an equity crowdfunding campaign, it is essential to take the time you need for pre-campaign activities (the precrowd) and have an adequate budget. The professionals at Turbo Crowd have partnered with Bookdealer to optimize their resources and achieve the best possible results based on their starting conditions, in just 2 weeks: being aware of limitations and possibilities is crucial to achieve results and avoid disappointment. This is also what professional consulting is for.

Turbo Crowd x Bookdealer: solutions

Bookdealer's great basic advantage was the pre-existing community: the marketplace's more than 54,000 users and more than 700 independent bookstores served provided a good starting point for identifying potential investors. Indeed, remember that customers are the first and most likely potential crowd investors! Beyond that, the Bookdealer team had a valuable network of contacts in the publishing world.

Thus, here are the solutions put in place:

• setting up a consistent reward strategy with the specific target audience of the existing Bookdealer community;
• building a sales pipeline with access through an expression of interest form on a dedicated landing page;
• direct involvement of the Bookdealer team in negotiating and selecting quality contacts;
• Facebook-only advertising, directed first to the landing page, then, after the campaign opens, directly to Mamacrowd;
• engaging the Bookdealer community through emails, newsletters and messages aimed at leading to expression of interest or booking a call with the team.

Last but not least, it was decided to lower the minimum threshold to 100,000€, to ensure a realistically attainable and safe first goal and not risk wasting the work done.

Equity crowdfunding Bookdealer: results

The strategies deployed, albeit in a very short time, and the commitment of the Bookdealer team led to success. See the data.

Campaign start: November, 25th, 2022

Campaign end: January, 24th, 2023

Minimum goal: €100.000

Raise: €199.201

Investors: 128

Beyond the capital raised, which still far exceeded the minimum goal, Bookdealer was able to discover the indirect benefits of crowdfunding:

• acquisition of new skills and tools (e.g., CRMs)
• acquisition of useful contacts, with inherent or cross-cutting professionalism in the books' world
• acquiring feedback and advice from service users.

Bookdealer's new members have also included a number of independent bookstores, who have gone from being users of the service to becoming an integral part of it, and many users who have come forward to offer support to improve the platform and support its growth with more than just money-this is the real wealth of crowdfunding.

Bookdealer's tips for successful equity crowdfunding

Top three tips for those who want to do crowdfunding, from those who have already done it:

• don't skip precrowd; 
• contact all people who express interest, regularly and repeatedly, and become skilled at persisting without being annoying, because to lead someone to give you money you have to be very persistent and convincing;
• keep calm!

To hear these tips from the living voice of Bookdealer's Leonardo Taiuti, we refer you to the dedicated webinar. On Turbo Crowd Facebook group we hold useful webinars for those who want to learn more about the world of crowdfunding.