Predrag Borojević is Executive Director of Udruženje Most and Funky Guerrilla, a non-profit association and a social enterprise, both based in Bosnia and Herzegovina. The latter is entirely owned by the former.
In 2016, Predrag and Funky Guerrilla launched a crowdfunding campaign from Gradiška. The idea was to help the social enterprise grow and, in doing so, to create jobs for youth - something sorely lacking in Bosnia and Herzegovina. He agreed to an interview with the Crowdfunding for Bosnia and Herzegovina Initiative to help others learn from what they did well and, more crucially, what they didn’t do well.
The interview has been transcribed below.
¤ Can you tell us about Udruženje Most and Funky Guerrilla clothing?
Udruženje Most is a local NGO in the Municipality of Gradiška, which is in the north of Bosnia and was established in 2009 by a group of friends who wanted to work primarily on youth issues and more specifically on mobility, non-formal education, and volunteering. We started off as a small local NGO and year by year we gradually developed. We developed our activities, expanded our target groups and did much more serious projects. Over the years we developed our vision and mission which are focussed on sustainable development. So we developed three programmes: a children and youth program, an environmental program, and an entrepreneurship program. In 2014, or basically in 2013, we decided to focus on social entrepreneurship in particular. The reasons were twofold. We wanted to work on youth unemployment issues with the capacities that we had and we also wanted to provide additional funding to our NGO through entrepreneurship activities - so we decided to establish a social enterprise. In 2014 we registered our social enterprise which is 100 % owned by Udruženje Most and started producing clothing. When we started the company we said “ok we want to have our own brand” because there are not a lot of local brands in Bosnia and Herzegovina, primarily clothing brands and we also want to provide sewing services to other companies. In September 2014 we launched the Funky Guerrilla brand, which is still up and running today. So the idea behind Funky Guerrilla was to provide employment, primarily to young people, and to in a way, to use this approach to see whether social entrepreneurship can really serve as a tool to finance the NGO itself.
¤ Why did you choose to use crowdfunding to raise capital?
The question shouldn’t only relate to the capital. We were working on the visibility of Funky Guerrilla from its beginnings. So in 2016, we had a lot of requests, including from abroad, and we wanted to use something new to promote the brand, to try and enhance the visibility of the brand in the country and also internationally, and also to see if crowdfunding can work. We had no experience with crowdfunding. We had just read articles and heard stories. So, exploring that income option in a way was pretty exciting to us and we wanted to try it out to see if it really functions and to go through the process and see how it works. We also had a lot of friends abroad who were unable to place orders or to give payments, so we decided to launch it just to see if they would be interested in supporting such initiatives and then to potentially use the capital we raised to invest in the enterprise itself. We also had an international team at the time with different skills, so we said this would be the best way to use the skills that we have to try something new and explore the path.
¤ Had you tried other options to raise capital prior to choosing crowdfunding? If not, why not?
We had tried different ways to raise capital prior to choosing crowdfunding. We basically started the company with the help of the Youth Employment Project which is financed by the Swiss Development Cooperation in Bosnia and Herzegovina. They provided us with the initial grant to start our company. After that, we were on our own. So basically when we established the company we had to be on the market that same day and we used the market principles to survive. So we were thinking about different options to raise the capital: through loans, investment, mezzanine investments, business angels, etc., etc. But, we were not ready for it. When starting something new, as we were, and new in terms of developing a production process, establishing contacts with suppliers and potential customers, branding our products, promoting the company, promoting the concept of social entrepreneurship, etc., these are all challenging tasks. It took a lot of time for us to go through these early stages of development so we could actually get a solid base for what we want to do, where we want to go, how we want to develop our company, how to position ourselves on the market, etc., etc. So we explored options for raising capital. We were even involved in certain investment ready programmes, primarily by Impact Hub Vienna. But then at one point, you realize that you are not investment ready at the very beginning. You need to develop a good business plan, you need to understand the market, find your niche market, make a good plan, and then get investment to start and scale. Scaling without a good plan could be a trap because the funding or the capital will melt soon if you don’t get the results needed and the whole concept might fail. That’s why crowdfunding seemed like a good idea: it would be something that we would develop that could potentially raise a lot of finances which we would potentially be able to invest in scaling to a small extent and it seemed like a reasonable thing to do at that time. Raising capital in Bosnia and Herzegovina, especially when you are young, in particular when you are a social enterprise, there is a big question mark around it. So usually people here either get loans and that is pretty much the only investment channel that they use. There are very few examples where you had a foreign investor coming in and helping you with your idea and pretty much there was nobody to relate to. Getting an investor also means a lot of primarily administrative procedures and it means that you're giving a part of your company to somebody. These are all things that you need help with: you need advice, you need a mentor to guide you through the process. That was something we didn’t have. With crowdfunding, you don’t need it; there are not a lot of bureaucratic procedures involved, it is much easier to set-up, you are in a way independent in that process, you choose how to communicate your message and you clearly present what you want to do with the money raised.
¤ What support from people with previous experience was available to you in terms of choosing a crowdfunding platform and developing a campaign?
We didn’t have a lot of support regarding how to choose a crowdfunding platform or how to develop a campaign. So we pretty much did online research to see how people did it abroad and to see what is the best approach. We also contacted certain people, but after the campaign started which was a mistake. So we didn’t have previous experience with it. We didn’t have any training on the topic of crowdfunding, so we basically used the online resources we could find in order to get at least hints or general directions on where to go, how to prepare, what the important steps to take are, and which are less important. We decided to go for Indiegogo because it is in a way more socially oriented than Kickstarter. We wanted to use a good worldwide platform because it brings a level of seriousness to the whole campaign and people trust the known brands more. Indiegogo and Kickstarter are in a way the super brands in the crowdfunding industry. So we decided to go for Indiegogo, primarily as I said because it is more socially oriented than Kickstarter at least that was our subjective opinion and we started developing our campaign.
¤ How much time and energy did you invest in the whole campaign process?
We put a lot of energy in the whole process. It took us about three months to prepare our campaign, primarily because we also had a pre-campaign. We wanted to get the interest of the people of our target audience so we decided to make a pre-campaign which was basically a comic explaining what we do and what Funky Guerrilla is all about. So we decided to use the comic approach to offer interesting content to our audience which we would publish each day for seven days before the campaign started. We did several trial and errors with the comic trying to find the right approach. In the end, we called it ‘The Guerrilla Case’; two detectives explore what Funky Guerrilla is all about and how we work with kids and young people. We basically wanted to get the interest of the people on a daily basis, so we published certain parts of the comic three times a day so the story would develop over a period of seven days and then the solution to The Guerrilla Case was given in the video. The video was pretty much the highlight of our Indiegogo campaign. It was developed together with a professional team from a marketing company from Banja Luka who pretty much offered their pro-bono services in order to support our cause. They are friends of ours and we had worked together previously so they were aware of what Funky Guerrilla is and means. Together we developed the video which we thought was very good. We thought it shouldn't be more than 3 - 5 minutes just to keep the attention of the people who would be watching and we tried to make it emotional but also informative so people could understand the concept between the NGO and the social enterprise. So the video was something that was pretty much the main focus of the campaign and the main promotional tool, but we also spent a lot of time developing the storyline, thinking about the perks, how do we explain the whole process, etc., etc. So it was a very challenging process as I said. Three months of pretty hard work and of starting something and saying ‘maybe that’s not the good approach’ and then changing.
¤ How did you engage your own social networks before and during the campaign?
We knew that the key to having a successful campaign was to engage pretty much all our network of contacts that we had developed over the years. So before we launched the campaign we were in a way mapping our contacts because we have been working since 2009 with the NGO and since 2014 with the company. Over the years we developed quite a large network of partners, of friends, of supports, of followers, international partners, people who work with us, etc., etc. So we wanted in a way to create a contact map of all of the people we work with and to create a database of contacts so that we could directly communicate with everybody. We also wanted to use social networks to promote the message to get a wider audience interested. We knew if we could get, for example, the video or the message with the campaign to go viral, then we would succeed. Another thing that we were thinking about was the influencers. We didn’t prepare that well for the influencers which kind of backfired on us, but we were thinking ‘who would be the best people who have followers who would be willing to engage in a certain crowdfunding campaign’ and we just kind of brainstormed on it but didn’t go through it in the proper way. Also, when we launched the campaign, only then we started exploring additional people who would be interested, expanding the network, contacting people, etc., etc. Later we realized that we made a mistake. Our biggest mistake was that we did not engage a lot of people before we started the campaign because that’s the key I think. One of the lessons we learned is to engage as many people as possible before the campaign even starts. Call them. Send them an email. Explain what you are going to do and just in a way prepare them for that initial launch of the campaign. If somebody is interested in supporting, in donating, in getting your perks they will do it in the first two or three days of the campaign, that way you get that initial boost. You will get maybe more than 20% of your funding goal raised in the very first days of the campaign, which is crucial for reaching the goal.
¤ You didn’t reach your target. What went wrong, what did you learn through the process, and what would you do differently?
We did not reach our target which was set at $21,000. As I mentioned previously, one of the reasons for that was that we didn’t go viral. We didn’t get the attention we wanted. The reason for that is we didn’t reach out to our partners and friends and associates in the right way and at the right time. We should have done it much earlier. We maybe did not develop the storyline in the best way possible. We put much more information than we needed. I think graphically we did ok which is also a very important step in that process - to create good graphics which people who prefer visual communication can relate to and see what the campaign is all about, what Funky Guerrilla is all about, and what the perks that we offer are. And when all of that was combined we had 10% of our goal fulfilled. So we raised $2,100 which was OK, but not as we had expected. We expected, well, of course, the goal was to succeed and to get the money that we said that we wanted to get, but we also were thinking that maybe in the worst case scenario we’ll get 30 - 50%. We didn’t expect just 10%. We learned a lot of things and now we would do things much differently, but there is also another argument that we believe is important: because our project was also socially oriented and it was not a technological innovation, it was not a new product that nobody has. We were offering something that has already been seen. In a way we were offering social innovation: using crowdfunding for that requires much better targeting, to target people who can relate to social causes. It maybe also requires developing a special unique product just for that opportunity. So something that was not present on the market. We needed to have that innovative unique product - that was something that we missed. I think that is one thing that in a way prevented us from reaching the goal. The second was, as I mentioned, not reaching the people before the campaign started, because we had a lot of feedback after the campaign itself and people said ‘well, 15 days into the campaign you had 6%, so we thought, you are failing, the campaign will never reach its goal, so we wanted to donate, but in the end, we decided not to’. Primarily because it was like ‘OK they're not going to make it’. So for that reason it is important to get that initial boost because when you have 20 or 30 % of your target raised in the very first days then people would say ‘oh look they are doing a good job this campaign is going to reach the goal, let’s help them out’, and then people start donating. So the more money you raise, the more people you attract because people would donate if they see that the goal that you are trying to achieve is reachable. If through the campaign they see that the goal might not be reached they will say ‘ah this is great, this is a great story, but they’re not going to make it, sorry I will not chip-in’. So that’s the second, I think, most important thing, getting that wide network of support in before the campaign even starts. The third reason why we think we did not reach the goal is primarily related to the media and influencers. We should have also found good influencers; there’s a wide network of people who have a network of crowdfunding supporters and they could mobilize their resources if they like your idea to help you out with the campaign itself. We didn’t know that before we launched the campaign. When we started the campaign there were a lot of people contacting us “oh this is good, but you maybe made a mistake here and there and you should have contacted us before the campaign we would have been able to help, to offer you services and to give you general directions in terms of where to go and to mobilise the crowdfunders”, because there are a lot of people who crowdfund (in terms of backing projects) on a regular basis because they want to get a unique product first, they want to feel in a way good by supporting certain causes etc., etc. So identifying those influencers and using the media to get that crowdfunders active was something that we missed.
¤ You chose to use flexible funding? Was this a considered decision?
When we developed the campaign we had two options: to use fixed or flexible funding. We decided to go with flexible funding. Why? Because we already had a production in place. So whatever money we raised, we would be able to use it, and it would be a way to get Funky Guerrilla products worldwide. So we decided, for that reason, to go for flexible funding. Now a lot of people say ‘well, of course, flexible funding is much better than fixed so why would anybody use fixed funding?’. The reason is, if you need an initial investment to start something like the minimal initial investment, it is better to use fixed funding. For example, if we were just about to launch Funky Guerrilla and we needed to get the sewing machines, the materials, this and that, we would probably go for the fixed funding. We would develop our budget, see what is our main target, main primarily financial target, and then we would go for fixed funding and it would be a yes or a no, a win or a loss. But with flexible funding, if you have some operations which are already ongoing, and you have a product developed, then I think it is better to use flexible funding because getting at least some income is better than nothing. We put our perks, or rather our milestones, in the way that we did because we want to create new jobs - this was the true goal behind it. We wanted to raise the capital to invest in additional production capacities and marketing and scale in Bosnia and Herzegovina, meaning to get into more retail stores in the county and that’s something that is not easily doable. So with $7,000 we said ‘OK we will provide the infrastructure for one employee and we will get somebody who would work on promoting Funky Guerrilla and in a way do sales throughout the country and we thought with that money that we raised we would be able to expand in the country. Unfortunately, we only raised around $2,000 and that was pretty much enough to cover the expenses of the campaign and the perks that we made.