Funderful, the web-based alumni giving platform and toolset developed in Latvia, is thinking of obtaining seed round financing in order to help the company expand in the US market.
The company has gained sufficient traction in the alumni fundraising market, including colleges at prestigious Oxford University to move to a next stage of development.
Up to now, founder Raimonds Kulbergs has financed Funderful from his savings and from revenues. Labs of Latvia recently talked to Raimonds about how Funderful got started, what it offers, and where it is going in the future.
Tell me how Funderful got started?
The story goes back to 2012 when I was running the alumni association of the Stockholm School of Economics in Riga and we needed to raise funds for scholarships. We could only get contributions up to a certain level with traditional means, so we decided to try to do something completely crazy. We made a campaign like no university had done before and called it “Let’s Beat Stanford”.
In six weeks’ time, we tripled the number of alumni giving back and in two years, we beat Stanford with a higher participation rate of alumni than Stanford. Most universities and colleges in the US compare themselves in terms of participation and we used that metric to set a goal for our community.
Our system was totally transparent, for instance, Estonians could see how contributions from alumni from Estonia grew, or the contributions of people at a particular company, for instance, to see how the contributions from Ernst & Young grew.
Friendly rivalry, competition, instant transparency were the elements that were there, coupled with having fun.
So how did this campaign develop into the Funderful platform?
A few years back, I realized the concept worked and that it was now or never. I was progressing in my career and thought that if I don’t do it, I will never have the guts to try, to take a leap and to do this for a living. Since then I have put all my savings and energy into this. It has been a tough period, but also exhilarating and exciting. It is about understanding how to motivate donors to give, especially the younger donors.
While doing that, one realizes that this is a huge issue in the States, universities raise billions of dollars, but their highest priority is to increase their donor base. That is where the major donors are. You cannot get a million-dollar gift if you haven’t donated ten dollars many years ago. It is about making a habit of donating to your alma mater or university.
The best universities like Stanford and Yale are doing well, but the rest are struggling. The reason that they do not have the tools, resources or capacity to do that, and that is where we come in. We think we can have a big impact in the whole (alumni fundraising) industry.
Are you saying the market is among smaller universities and colleges? I went to Columbia and I have been getting all kinds of alumni donation materials for years…
Even your university could find us useful. Snail mail is not effective. Millenials (young adults born after 1982) don’t open paper mail. Millenials also don’t have the automatic sense of responsibility to give back to their school. How you can engage millennials and the wider generation of donors is not by the rational part about responsibility, but making it a tribal experience.
University alumni are the ultimate modern tribe, especially if it is an undergraduate experience to which you feel a strong belonging for the rest of your life. That is something that universities can tap into, the tribal feeling of giving back.
Big universities rely on their alumni as volunteers to solicit gifts, they reach out by e-mail, Facebook and other contacts, each to 20 or 30 others. That is how the best universities do it. But it is extremely time consuming to manage a volunteer program, many do it through Microsoft Excel, and that is where another Funderful function comes in.
How many customers use this?
We are present in six countries. Oxford university colleges use it, US universities use it. These customers are coming back for a second year, especially the UK and US universities. Presently we have a good business case, we can sustain ourselves and are profitable. The next challenge is to make us known in the US market. Those who know us are big fans and stick with us, but they are only a handful at present. We have to be more visible in the market and that is what we have to invest in.
Do you have any external funding?
Primarily, it has been my savings. We have managed to bootstrap, which for us has been a good approach. It ensures that we learn together with the customer, we make mistakes together, and are forced to find a product/market fit quickly. At the same time, there is no excessive pressure to grow too quickly. It takes time to understand what exactly it is that we are doing, what does the product do and how do we communicate about it. That takes time and it might not help if we had an early investor.
Do you have any plans for a first round of funding, perhaps to expand into the US, to gain a presence there?
We will need a US investor to truly capture the US market. As a next step we first want to increase our client base in the US. Therefore we are currently preparing for a
bridge round that would help us to move faster and get to a stage where we have a company that is attractive for a next-stage US investor.