The upcoming EIG Berlin Expo (21-23 October) will study present and future impacts on the gambling/igaming value chain. Team SBC and EIG caught up with GamCrowd CEO & Founder – Chris North, to discuss new venture financing in the gaming sector. Chris North details how knowledge driven crowd funding, can better help gaming ventures and new ideas come to fruition.
A driven entrepreneur with 21 years’ experience of various business fields in Asia, Australia and Europe. Chris North has spent the last decade working in the gambling, with the biggest retail and digital operators in the sector. Experienced in founding and running businesses from setup, through branding, corporate structure, fund raising, management and exit. In 2013 Chris Setup GamCrowd, the gambling sector first Crowdfunding platform.
SBC: Hi Chris, great to catch up. It has been six months since you launched GamCrowd, how is your crowd funding business developing?
Chris: We have gone live with our crowdfunding platform and took the decision to “self-fund” this means we sold shares in GamCrowd via our own platform. We have been delighted at the way this has gone so far and we have hit 93% of our funding target after just 15 days and now intend to “overfund” and raise another £50k. We now have 33 new, high quality shareholders with a high percentage who are C level executives in the gambling industry, which will be great for us in the long term. We are also busy working on other modules to go live which includes crowdsourcing and peer to peer business loans.
SBC: How do you see GamCrowd fitting in igaming value chain? Where do you see your product and financing having the biggest impact in igaming/gambling’s industry arc?
Chris: We are all about helping businesses get started and grow when otherwise they couldn’t raise funding to do so, we believe this is essential to the I Gaming value chain. Currently we are helping with seed capital for start-ups or small second and third funding rounds for more established businesses. The next phase of our offering will be Peer to Peer loans which will offer a real alternative to bank debt which is becoming very hard to find and often comes with strict covenants which restrict which markets a gambling business can enter. Crowdfunding also comes with marketing benefits gained through the crowdfunding process and a widening of the shareholder base, which on GamCrowd is likely to include some real expertise and a life time of industry contacts.
SBC: In your opinion has a lack of knowledge in venture financing effected innovation within the igaming sector. How could crowd funding circles help combat this industry factor?
Crhis: I am not sure that the matter can be put down to a lack of knowledge amongst VC’s, when it is more often the economics of a VC which restricts the size of deal or their risk appetite which either keeps them out of gambling all together or only allows a VC to back an established business. However, there is a lack of knowledge amongst start-ups and we don’t see the VC industry solving that issues; there isn’t a single portal where a start-up can submit a business plan and set up a number of appointments with interested VC’s – GamCrowd offers that single point of reference for Gambling start-ups.
SBC: With igaming set to undergo several changes due to incoming regulation and taxes, do you fear that igaming ventures may not be an attractive proposition to crowd funding investors?
Chris: Not at all, the market is about to go through a huge shake up and that will create lots of opportunities for start-ups; either to help companies deal with new regulations or because existing operators will struggle with their business model and cost base. If you look at the US, companies that specialise in Geo Location would not exist without the NJ regulations.
SBC: Other business sectors are beginning to see the impact of crowd funding on their business value chains, what can igaming learn from these sectors in order for crowd funding to become a reality for igaming?
Chris: For equity crowdfunding, most business sectors have yet to get behind the crowd and most of the growth has come from generic sites which are not industry focussed serving the early adopters across all industries. In fact people in the crowdfunding industry tell us that gambling is one of the first and I believe this is due to the particular problems that the industry has with financial services. Where industries have developed specific sites they tend to be for video games and media publishing and are heavily linked to rewards, such as “fund this film and be an extra” this is because crowdfunding grew up in the US before the regulators allowed equity crowdfunding. That is all changing now and people are investing for shares and I believe that GamCrowd is the first equity crowdfunding site that is industry specific.
SBC: Looking ahead to the future, what current and future impacts does igaming need to address in order to allow for growth in innovation and business value?
Chris: As a sector We need to overcome the hostility of the financial sector towards our industry or find alternatives. Even the biggest PLC’s are subject to restrictive banking covenants which limit markets and products, they are also subject to short notice withdrawal of services when a bank decides it doesn’t want to be involved in gambling even where it is legal and regulated. For a start-up it can be very hard to open a bank account let alone borrow money. The industry needs to continue its tradition of developing alternative methods of payment processing and add to that alternative methods of funding if we are going to fund innovation.
SBC: You will be presenting at the upcoming EIG Berlin Expo, what do you want delegates to take away from your session?
Chris: Simple, increased awareness of the value of the crowd. We will be presenting and hoping to explain the benefits that crowd based services can bring to businesses from the biggest land based operators to the smallest start-up. We want the industry to start reading and understanding what the crowd can mean for them. When social media started to have an impact on our industry most execs started to read up on the subject and attend seminars. That increased awareness has meant that the industry has exploited the new media well. We believe the industry needs to take a similar approach to understanding the crowd.
Chris North – CEO & Founder GamCrowd
Investing in start-ups and early stage businesses involves risks, including illiquidity, lack of dividends, loss of your investment and dilution and it should be done only as part of a diversified portfolio. GamCrowd is targeted exclusively at investors who are sufficiently sophisticated to understand these risks and make their own investment decisions. You will only be able to invest with GamCrowd once you are registered as sufficiently sophisticated.
Crowdsourcing and lending to businesses are not FCA-regulated activities.
GamCrowd Limited is an Appointed Representative of Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority (FRN: 574048). GamCrowd Limited is registered in England and Wales. No. 08702280. Registered address: Palladium House, 1-4 Argyll Street, London, W1F 7LD