Supported by The Co‑operative Bank
How to finance your platform co‑op start-up
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Pre-seed: Phase 3 – testing

You’re now officially a co‑op and are ready to test the market with your product. To do so you build low cost prototypes that you start to test with your first users.

Aim to start generating revenue with a small dedicated user-base prepared to experiment. Start developing your internal processes and identifying the roles that you will need to grow the business. Platform co‑ops have raised £50,000-150,000 in this phase.

Available funding

  • If you are able to generate a small revenue at this stage, you can choose to boot-strap your business. This means relying on the same type of funding of the set-up phase, and growing your business only thanks to your progressive increase in revenue. Though this is a preferred option for some businesses, it won’t fit most platform co‑ops that will aim to grow faster.
  • With a recognised brand, you could seek sponsorship from an aligned organisation. Sponsorship should be tied to a specific output, like a newsletter, a series of events, promotional material, etc.
  • Now that you are developing a Minimum Viable Product (MVP), grant funding is an ideal option, especially if the product has a clear social mission. Consult UnFound’s database of #TechForGood funders. [here]
  • Crowdfunding is still a useful way of raising finance, especially if you didn’t use it in the previous phases. Now that you are developing your offer, you can use a reward based crowdfunding as a way to start selling your first services or products.
  • Agree credit terms with your suppliers that allow you to manage your cash flow. Suppliers can, if you cultivate a good relationship, be part of your wider support network. It is in their interest that potential customers succeed in their business.

What you need before you start raising funds

Fundamental

  • All of the milestones indicated in the set-up phase.
  • A team able to run the business and build prototypes.
  • A small user base prepared to test the prototypes.
  • A recognisable brand.
  • An increasing and engaged social media following and newsletter subscription rate.
  • Clarity on your funding runway and justifiable ask.

Ideal

  • A small revenue from the products and services you’re testing that help to cover some costs and to prove that your business case is correct.
  • Expressions of interest from potential users.

Case study: Signalise raise funds via a rewards-based crowdfunder

Signalise is building a platform co‑op to hire British Sign Language (BSL)/English interpreters and translators. The multi-stakeholder co‑op will serve its members comprising of Deaf people, health staff and interpreters.

In October 2020 Signalise launched a reward-based crowdfunding and raised £8,600 from 255 supporters in 28 days. Rewards went from a simple mention as a supporter in their website (£5) to a voucher to cover the admin cost of 10 BSL interpreter bookings (£200). 

By doing so, they used the crowdfunder to test the appetite for the services they aim to provide.

Signalise is set up as a Co‑operative Society. The co‑op is still at an early stage of development, but has already an online booking form and has currently raised £73,000 in grant funding and donations. 

Co‑operatives UK supported Signalise with business support via The Hive.