The Cryptonomist interviewed the CEO of MamaCrowd Dario Giudici to find out all 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 specializing in the sale of wines and hard liquor. 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 sales of over €8M in 2020 and a growth plan aimed at a 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 drinking water in a completely recyclable and customizable container, composed of about 70% plant-based materials).
All of them have already exceeded the minimum collection target, so they can be considered 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 its growth by bringing investors on board is a success, growing the value of the company over the years is a success, going public 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 factor is the people. When a team is solid 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?
Communication skills are crucial in the life of a company, in particular when approaching the market through a crowdfunding campaign. The best campaigns are not necessarily carried out by the best companies, at times they are run by the best at communicating and creating engagement. This is something that can’t be improvised and is usually best done by companies that have always been attentive and focused on engaging their target communities.
Have you ever considered engaging with crypto companies by doing token sales?
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 consists of raising venture capital, where investors 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 tokenomics 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, investors are at least certain that the value of the units or shares will reflect that of the company in which they have invested.
By contrast, the 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 success is measured. In general though, if we talk about those that have carried out 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 made 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 analyze, so all things considered these numbers should not be surprising.
What is the percentage of start-ups that receive the required funding?
On MamaCrowd we have a campaign success rate of 88%, but as I said, this is also the result of a strong selection process.
What should users consider when investing in startups?
They should be aware that this is a risky asset class, but also that the risk can be greatly mitigated through diversification. In other words, rather than trying to guess the successful startup, it is the number of companies in which you invest that counts. Some may fail, but those that grow can increase their value so much that they can overcompensate 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.