Fund The Production of Your Inventory with Kickfurther

Roy Morejon:
Welcome to Art of the Kickstart, your source for crowdfunding campaign success. I’m your host, Roy Morejon president of Enventys Partners, the top full service turnkey product development and crowdfunding marketing agency in the world. We have helped startups raise over 100 million dollars for our clients since 2010. Each week I’ll interview a crowdfunding success story, an inspirational entrepreneur, or a business expert in order to help you take your startup to the next level with crowdfunding. Art of the Kickstart is honored to be sponsored by Gadget Flow. The Gadget Flow is a product discovery platform that helps you discover, save, and buy awesome products. It is the ultimate buyer’s guide for luxury gadgets and creative gifts. Now let’s get on with the show.

Roy Morejon:
Welcome to another edition of Art of the Kickstart. Today, we have got an exciting episode for you. We are talking with Sean De Clercq co-founder and CEO of Kickfurther. Sean, thank you so much for joining us today on Art of the Kickstart.

Sean De Clercq:
Hey Roy, it’s great to be here. Thanks for inviting me.

Roy Morejon:
Yeah, no really happy to have you. I know you’ve worked with a bunch of our clients that have used you post crowdfunding. And really excited to kind of learn more and introduce you to our audience in terms of what you do. I mean, you’re a lifelong entrepreneur working on solving one of those hard problems that businesses face in terms of how to fund the production of their inventory. And I know you had to deal with that yourself. So I would love for you to introduce yourself to the audience. And tell the audience a little bit about where did this start? Tell us the backstory and what inspired you to create Kickfurther?

Sean De Clercq:
Absolutely. Thanks, Roy. So, I think like a lot of your audience, I was an aspiring entrepreneur myself. My background and my parents’ business was in supply chain management. So that’s where I really cut my teeth in helping other businesses to manage their factories, typically overseas. And I started my own company, a merchandising company, where we worked with factories. We took products that they were making, customize them a little bit, and then we would sell them as exclusive white label products to retailers here in the US. And it was in the growth of that business, we did 600,000 of sales in our first year up to over a million in our second year. That I encountered this issue of inventory finance.

Sean De Clercq:
And it’ll be familiar to your audience where my factories in China, they didn’t want to produce any inventory for me until I had paid them. Right. They didn’t know me. My business was only a year or a year and a half old at that point. And so they needed me to pay them a deposit. I needed to put that money down and then float it and pay the balance. And then when I delivered all of the inventory to my retailer, the buyer, they wanted me to wait 30 days to get paid. I was on Net 30 terms, which is actually great for a lot of businesses. And so it was there where it was, 30 days production time, 30 days shipping, plus a 30 day payment term where I had to effectively pay for the inventory for three months before I could get paid. And in the meantime, I had to pay my rent and keep the lights on. And pay the rest of the team.

Sean De Clercq:
And so it created this cashflow gap where I knew there were sales coming. I had a growing business, but I needed funding and some support to fund that inventory before I could continue to grow my business. And when we went out to market and looked at what was available, it was just, really expensive, really, really restrictive covenants on getting that funding. And it just felt like there should’ve been a better, more efficient solution for product entrepreneurs. So we looked around and nobody was doing inventory crowdfunding. So we kind of just grabbed the idea and ran with it.

Roy Morejon:
Yeah. I mean, I love the fact that Kickfurther is connecting these growing startups or CPG product businesses to a community truly of individuals that can help them raise the funds, enable a larger more cost effective inventory production runs with their manufacturers. So when did you guys fund your first deal?

Sean De Clercq:
So the very first deal we funded, it was with a friendly entrepreneur. It was way back in November, of 2014. So, coming up on seven years now. And it was for an online clothing retailer.

Roy Morejon:
Nice. So have they come back to the well, more than one time?

Sean De Clercq:
They did. They ended up doing, we ended up funding three deals with them over their lifetime on the Kickfurther platform.

Roy Morejon:
Yeah, that’s great. So let’s go back to those early days, 2014, 2015, if you will. When you were creating Kickfurther, what was that process like? And how did you go about deciding what features, services to provide and how to price them?

Sean De Clercq:
That’s a really funny question. So literally in the early days it was me and my co-founder, for a few months there, it was just a team of two. We brought on another co-founder in January, of 2015. And when you’re so young, it was literally like we were spending our time and energy building, what needed to be built then in there. Right. One of the stories I like to tell is, you could fund inventory on Kickfurther, but up until about six months after we were live, there was no way to withdraw funds. And we were processing everything using Venmo, sending payments from our bank account back to our users.

Sean De Clercq:
And I was personally processing those withdraws up until about nine months in. And then it just, we started hitting the weekly Venmo transaction limit. And it was only then when that totally manual system literally didn’t work anymore, that we built and developed our ACH solution, which processes withdrawals now for our users. But that was literally the way we did things. It was like, we kind of procrastinated until it was necessary. And then we got it done. And I think, that’s actually not a terrible philosophy as a startup.

Roy Morejon:
Yeah, absolutely. Right. If it’s not broken, don’t fix it. But you guys push the limits on things and that’s what needs to implement change. Right. For more users to come in and be able to scale and grow like you done.

Sean De Clercq:
Yeah. I often say that startups live and die on the allocation of resources, which is typically time and money. And working on stuff that is important and urgent when it becomes urgent is one of the ways of making sure you’re prioritizing stuff. But when you get a little bit more mature, you want to get to that important stuff earlier.

Roy Morejon:
Absolutely. And only one of those is infinite, right?

Sean De Clercq:
Yeah, exactly.

Roy Morejon:
So what was launched like, for your brand going out there?What did you guys do to launch the brand?

Sean De Clercq:
So in the early days, we just came out of an accelerator. I hadn’t raised a ton of money. So we were really relying on a lot of what people would call growth hacking or guerrilla marketing tactics in the early days. One of my co-founders originally, we were looking for deals to put up on the platform and he was like, Oh, how are we going to get these deals funded? Even if we get the deal up on the platform, who’s going to fund it? And I was like, don’t worry about that. Let’s worry about getting the deal live. And then I’ll just, I’ll go on Reddit and we’ll find people that will fund it. And almost exactly that’s what happened. We found the first deal. We had pretty much zero users other than some friends and family that helped us fund that deal in November.

Sean De Clercq:
And we went out on the internet and we kind of just talked about Kickfurther. We went to our startups, our entrepreneurs, and tried to talk about what we were doing and to engage with the communities in an authentic way. And literally that’s how it started. We found our first 100 users probably through guerrilla marketing, primarily on Reddit. And from there, we just had a user referral program. And our users helped us find other users, those early adopters that believed in what we were trying to accomplish, helped us to promote the website. And since then, we haven’t had to spend much on user acquisition, which is great.

Roy Morejon:
Yeah. That’s been amazing. So how many brands have you guys worked with now over the last seven years?

Sean De Clercq:
Gosh, I have to say we’ve probably worked with over 500 brands, I would say, around there.

Roy Morejon:
Nice. And most of them, like you had said, potentially are coming back for more after they do their first run with you guys?

Sean De Clercq:
Yeah. So businesses that make it onto Kickfurther that qualify for our platform, are typically doing about four deals on average with us. And we see that each deal, generally the trend is each deal is about 25 to 30% larger than the previous one.

Roy Morejon:
Nice. So when you guys were starting up Kickfurther, did you take on any debt or investors?

Sean De Clercq:
Yeah. So our early funding timeline, the first thing that we did when we started this business is we got into a business accelerator that was out in Boulder, Colorado. Shout out to Boomtown Accelerators. They were a great team and really helped us get our feet under us and find some of our early mentors, advisors, and investors. From there, we’ve raised a convertible note in 2015. And then we raised, essentially a bunch of convertible debt was our vehicle of choice. And we were fortunate that now we’ve kind of moved into preferred shares, equity rounds.

Roy Morejon:
Beautiful. So what’s one thing that you wish you had known before you started Kickfurther?

Sean De Clercq:
So probably, one of the things that people told me at the beginning, and I didn’t believe that I would share with any other entrepreneurs is that our first convertible note that we’ve raised had a $2.5 million cap on it. And the reality is, is that those investors that are coming in on the very early investment rounds, they’re coming in for large outcomes. And the difference of a $2.5 million cap, or realistically a $5 million cap for our organization, it probably would’ve been the same. We probably would’ve raised roughly the same amount of money. And the only difference was we just took on more dilution than we needed to.

Sean De Clercq:
So I look back on that as being a little bit inexperienced and not knowing how the market functions. But I think it’s tough when you’re an early entrepreneur to recognize that raising funding is actually creating an opportunity for those investors. That the number of true high scale potential businesses is worth, the opportunity to get into those kinds of businesses is worth 5 million bucks to early investors. So I would say, don’t sell yourself short and don’t leave money on the table. It’s one of those things where you can command a higher price than you might believe if you are a little bit more aggressive on the front end.

Sean De Clercq:
The other thing I think is to really dig down and to understand your unit economics from a very early stage. It was when I got a very firm handle on my customer acquisition costs and my lifetime value that I felt like fundraising and the ability to really scale the company opened up for us as an organization. So I would recommend that any entrepreneurs, the philosophy of, if you build it, they will come, does not play and investors don’t want to hear that. So have data on how are you attracting people? What does it cost for you to bring people to your product? And how much revenue do you expect to earn from them?

Roy Morejon:
Absolutely. Solid insights there, Sean. So in your young career, what’s been your biggest failure? And what did you do from?

Sean De Clercq:
Interesting. What is my biggest failure? What did I learn from it? Probably my biggest failure was the business prior to Kickfurther. Where we went from having a business that was profitable. It had grown more than 50% year over year, and we just hit this wall on finding financing, inventory, finance, and it pretty much killed the business. And I went from that experience and I started Kickfurther, but that was extremely painful. And I learned at that stage that having financing for your business, it’s not an option. If you want to have a scaling, a growing business, you have to have a solution for how you’re going to fund its growth. And that was a painful lesson to learn. It caused me to close that first business. But it also put me on the path of starting Kickfurther. And so it’s hard to have too many regrets about it.

Roy Morejon:
Sure. So what advice would you give to someone wanting to pursue a career similar to yours?

Sean De Clercq:
Have an open mind. Be ready for the emotional highs and the emotional lows. I think that being mindful and having strong, philosophical fortitude around the fact that you have to do the best you can. And you have to understand that sometimes things are out of your control. And to deal with that, to be able to keep moving forward when you’re feeling really great and also when you’re not feeling so great, I think is a survival trait that you need to have as a CEO or as an entrepreneur, that’s going to start a startup. And don’t be afraid to dive into the problems. Right. I think there’s a tendency. A lot of times people prefer to kind of ignore the stuff that’s not the good news. But I actually think that a focus every single day on the things that aren’t working, is how you take a business and turn it into a very successful, scalable organization is actually a focus on the negative and how to improve that over time. And not by ignoring it.

Roy Morejon:
Absolutely. So what are some of those best resources that have helped you along the way?

Sean De Clercq:
I would say, for me it’s so personal. Right. I know that myself as entrepreneur, I am a procrastinator. I was never a true academic person. Right. So I know that I need and do better with support on stuff that helps me to stay organized. And helps me to stay on top of the management of the organization. So, what I found to be very useful for us as Kickfurthers, relying on tools that shore up, what I think are areas of opportunity. Right. For me to improve. So we invest in stuff like Salesforce, right? A powerful CRM that helps us to manage and to understand our acquisition funnels, stuff like that. We invest in Carta. is one of the other tools that we use to help me manage the cap table and to keep all of that straight. So I think as an entrepreneur, what you want to do is be mindful of where your strengths and your weaknesses lie and shore up those weaknesses and double down on the strengths.

Roy Morejon:
Absolutely. So last year was a challenging year for a lot of companies. I think you guys probably saw some interesting trends over the pandemic. So what did you guys do from a marketing perspective to stay top of mind?

Sean De Clercq:
That’s a great question. So actually what happened in Q2 is we turned off almost all of our marketing because like us and many other people, we didn’t know what was going to happen in the pandemic and so we actually reduced. Our first move when everything was happening, was a conservative move to actually preserve our cash position. And what that meant was reducing the impact of growth efforts. And then when we saw that pretty much across the industry, the ability for product companies to get funding was severely impacted during the pandemic. We decided, look that was an opportunity for Kickfurther. We could still operate with our marketplace model and there were entrepreneurs that really needed the inventory funding and other people weren’t paying attention. So we’ve ramped everything back up. I mean, we probably turned everything back on in early May.

Sean De Clercq:
So we were probably quiet for about 45 days, I would say. And that worked really well for us. So we did a funding contest. Because previously, we had been going to a lot of trade shows and events and none of those were happening, but we knew that people were paying attention and there was a tension available online to when let’s say. So we worked with some of our partners and we put together a funding contest. That was a big success. It also got some product companies, cost-free inventory funding, which I think was a nice way of doing good and doing well at the same time. And then we invested in direct mail and digital marketing. Because we saw that there was a lot of activity and attention in the digital space.

Roy Morejon:
Nice. So where are you guys headed this year? What are the growth plans?

Sean De Clercq:
I think, we continue to invest. I have what I call a bullets and then cannon ball strategy. So we ran a lot of experiments last year, we saw what was working. This year, it’s to send cannon balls after those bullets that hit, which for us, is investing deeply in our partnerships. We have a great network of referral partners and they win, when we win. So that’s been working really well for us. It’s to invest in business development moving even further up the chain, working with larger organizations to provide liquidity for their clients that might have inventory needs. And it’s also to invest in Kickfurther’s product, where we’ve recently raised an equity round. And that gives us the ability to create a better experience for our businesses and our users, which of course, we as an organization, hopes translates into growth, right?

Roy Morejon:
Absolutely. Well Sean, this has been awesome. This is going to get us into our launch round, where I’m going to rapid fire a handful of questions at you. You good to go?.

Sean De Clercq:
I’m ready, Roy.

Roy Morejon:
Let’s do this. So what inspired you to be an entrepreneur?

Sean De Clercq:
Capitalism. I’m a tried and true capitalist. I’ve realized that the way capitalism works is if you’re generating X value for your labor, somebody else’s making X plus one, that’s the only way that capitalism really works. And I decided from an early age that I wanted to own a 100% of the value of my labor.

Roy Morejon:
Absolutely. So if you could meet with any capitalist, I mean, entrepreneur throughout history, who would you want to have a coffee with?

Sean De Clercq:
I have always admired Bill Gates. I think what he did with Microsoft and then translating that into curing polio in India, that’s the kind of entrepreneurship that I really respect. And I would love to pick his brains and understand his journey.

Roy Morejon:
What would be your first question for Mr. Gates?

Sean De Clercq:
Where do you go from here, Mr. Gates? What’s next for Gates and the Gates Foundation?

Roy Morejon:
Yeah. He’s definitely got his hands in a lot of good things, I believe these days.

Sean De Clercq:
Yeah.

Roy Morejon:
Who did you look up to growing up as a kid?

Sean De Clercq:
I used to look up to Albert Einstein a lot. I always used to take pride in kind of being a smart guy. That was one of the things I identified with. Einstein was always, the smart guy. And the more I learned about him, he was also a smart guy, but he was also, seems like a really good dude. So that was somebody I liked.

Roy Morejon:
Nice. Yeah. He’s definitely got an interesting story. Thinking about our audience, any books that you would recommend to them?

Sean De Clercq:
Yeah. I think the number one book that I recommend to all entrepreneurs is Thinking, Fast and Slow by Daniel Kahneman. I think that there’s just nothing more valuable than understanding how human psychology works and understanding how humans make decisions. And so that’s the most valuable book I would recommend. Honorable mentions would definitely be Traction by Gino Wickman and the entrepreneurial operating system I think is great. And Thinking, Fast and Slow by Chris Voss, which is an interesting book about the art of negotiation.

Roy Morejon:
Oh, you mean Never Split the Difference.

Sean De Clercq:
Oh yes. Never Split the Difference by Chris Voss. What did I say, Thinking, Fast and slow again?

Roy Morejon:
Yeah. Yeah. Yeah.

Sean De Clercq:
Yeah, sorry. Never Split the Difference by Chris Voss, Traction, Gino Wickman, and Thinking, Fast and Slow, Daniel Kahneman.

Roy Morejon:
Definitely. That’s is a solid three-pack right there for our listeners. So usually I, well, I guess I’ll ask you this because it’s interesting in terms of, I know your sister ran a crowdfunding campaign, correct?

Sean De Clercq:
Yes, she did.

Roy Morejon:
So given your insights in inventory funding and helping out the businesses with their products, what do you see the future of crowdfunding looking like?

Sean De Clercq:
I think we’re really in the nascent stages of crowdfunding. I think what you’re seeing now is really a retail revolution happening. And you see it reflected in things like GameStop and that frenzy and the craziness that happened. I think you see it in the current environment where you have businesses that are doing specs, which are essentially opening up venture growth opportunities to regular retail investors. And I think as the world becomes more interconnected, we’re going to see that we’re really just at the very beginning of a whole retail revolution. Where the individuals and the ability to really optimize and to take advantage of the wisdom of crowds being empowered by the internet. That we’re really only just starting here. I think it’s an exciting time.

Roy Morejon:
Absolutely. We’ll Sean, this has been awesome. This is your opportunity to give our audience, your pitch, tell people what you’re all about, where they should go, and why they should check out Kickfurther?

Sean De Clercq:
Yeah. Well, I think what we’re looking at doing at Kickfurther is supporting entrepreneurs. If you’re interested in doing that as a user, there is zero cost to create an account and it’s as little as $20 to start funding inventory for great product businesses. And if you’re a product business again, zero cost to apply and find out whether you qualify for funding on Kickfurther. I always recommend, get ahead of it, come meet us, make a connection with one of our sales team members. And if we can be helpful, that would be awesome.

Roy Morejon:
Absolutely. Well audience, thanks for tuning in make sure to visit artofthekickstart.com for the notes, the transcript, links to everything we talked about today. And of course thank you to our crowdfunding podcast sponsors, the Gadget Flow and product type. Sean, thank you so much for joining us today on Art of the Kickstart.

Sean De Clercq:
Thank you, Roy. It was great to be here.

Roy Morejon:
Thanks for tuning into another episode of Art of the Kickstart, the show about building a business world and life with crowdfunding. If you’ve enjoyed today’s episode, awesome. Make sure to visit artofthekickstart.com and tell us all about it. There you’ll find additional information about past episodes, our Kickstarter guide to crushing it. And of course, if you love this episode a lot, leave us a review at artofthekickstart.com/itunes. It helps more inventors, entrepreneurs, and startups, find this show and helps us get better guests to help you build a better business. If you need more hands-on crowdfunding strategy advice, please feel free to request a quote on Enventyspartners.com. Thanks again for tuning in. And we’ll see you again next week.