Tech firms can have many different reasons to opt for equity crowdfunding over traditional forms of investment. For Leeds-based home security startup Cocoon, it’s about freedom.
“There’s less focus on a swift exit with equity crowdfunding,” says co-founder Colin Richardson. “You get more freedom than with institutional funding.” And while it sounds like the kind of thing tech firms say to look more important than they really are, he sounds genuine when he says the company is “on a mission” that needs longer-term thinking than VCs might tolerate.
“It can seem corny to say ‘we’re on a mission,’ but we genuinely want people to feel safe. We want to give freedom for people to go out knowing that their home is safe. We’re rethinking the home alarm system, which hasn’t really been redesigned since the ’80s.”
The firm’s current £2,500,000 campaign on Crowdcube is to raise cash to expand its retail presence and move into the US market. This is Cocoon’s second go at crowdfunding. It ran a more traditional campaign on Indiegogo to help get its product off the ground in early 2015.
Richardson likes the ‘super-fan’ investors that equity crowdfunding brings on board. He argues that because they’re both users and advocates, they can help stop the company making decisions that may detract from the company’s mission.
Cocoon’s internet-connected home security system aims to monitor an entire house with a single device. Over time, it learns what your home sounds like, including noises from people moving around, watching TV and the like. That means it can identify when something is amiss without you having to place cameras in every room.
Although Richardson says VCs aren’t a good fit for Cocoon right now, the Crowdcube campaign is accompanied by more money from two existing investors – insurance giant Aviva (admittedly through its venture arm) and internet-of-things incubator Breed Reply.
Cocoon’s trajectory looks good right now. They recently brought on a new Chairman in the form of Robin Terrell, former Managing Director of Amazon UK and CCO of Tesco. This means they have exactly the right retail smarts and connections as they look to expand.
Tech wise, the company plans to move its ‘Subsound’ audio-based security technology out of devices and into the cloud. This will open up the possibility of bringing many more Subsound-enabled devices to the market.
With 11 days remaining on the campaign, Cocoon is over half way to its £2,500,000 goal. You can find out more about the investment round on Crowdcube.
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