App to Help Black Barbershops Looks to Equity Crowdfunding to Grow
The barbershop has built ladders of opportunity in black communities for generations. Skilled barbers build a steady stream of income, and customers benefit from the marketplace of ideas, community building, and side hustles cultivated at these economic and cultural centers. Appointment-booking app theCut is extending the economic opportunity of the barbershop to barbers, their clients, and you with an equity crowdfunding campaign on Republic.(theCut mobile app. Image: thecut.co)
Equity crowdfunding puts the power of being a startup company investor into the hands of anyone over 18; an opportunity previously restricted to wealthy accredited investors. This means that adults can invest as little as $50 in high growth startup companies like theCut and potentially receive a representative ownership stake in the company. In 2017, black-owned startup companies like Jetpack ran successful equity crowdfunding campaigns. These campaigns raised hundreds of thousands of dollars for the companies and offered low-cost opportunities for new investors to earn and build wealth.
Founded by Obi Omile and Kush Patel, in less than two years, theCut has grown to more than 100,000 users and booked more than 450,000 appointments for over 9,000 barbers and customers. Black Enterprise contributor Brandon Andrews sat down with theCut co-founder and CEO Omile to learn how he plans to use equity crowdfunding to grow in 2018.
Brandon Andrews: Getting a haircut should be easy, but sometimes it’s not. How does theCut make getting a haircut easier?
Obi Omile: We use technology to connect you with your barber. Barbers around the country can download the app and create a profile showcasing their best cuts and reviews from clients. They also list their services, location, and hours so you can book and pay for your next haircut anywhere you are, anytime you want.
theCut has grown to over 100,000 users and booked more than 450,000 appointments in under two years. What has been the key to your growth?
Word of mouth has been huge for us. We’ve been able to leverage the power of our users and social media thus far. Building an intuitive product that both barbers and clients enjoy has driven a majority of our growth. We’re solving a huge problem that most people have experienced, which naturally lends itself to exciting conversations around a new solution.
How will an equity crowdfunding campaign help theCut continue to grow?
Of course, the capital raised from the crowdfunding campaign will keep the lights on, allow the business to increase marketing spend and grow its team. However, the secondary benefits are just as important. By initially allowing our users to invest, we are aligning ourselves with our most valued stakeholders. Giving our community of users the opportunity to invest incentivizes them to actively take a role in theCut’s success, creating an engaged base of brand advocates.(theCut App. Image: theCut.co)
How did you prepare your business for the campaign?
We’ve been planning on launching the campaign for months, however, we needed to be sure the company had the available time and resources. While planning, we focused on effectively communicating our vision and story to potential investors. The importance of pitching a compelling narrative within the first few minutes reading cannot be overlooked. We worked hard to craft a story that both relays the necessary business elements and captivates the hearts and minds of investors.
In preparation for the campaign, we reached out to our users to gauge their interest in investing. In addition, we spoke with friends and family to curate a list of potential investors. We also reached out to local news organizations and journalists who are passionate about crowdfunding to help share our story.
Why was this the right funding opportunity for your business? What should entrepreneurs consider before raising money through equity crowdfunding?
Crowdfunding is incredible at creating social proof and validation. To investors and interested parties, the fact that people you don’t know are willing to invest and fund your dreams is a powerful and persuasive tool in market validation. Before launching an equity crowdfunding campaign, founders should completely understand the time and business requirements. Analyzing the various platforms on investment types, user demographics, and campaign funding requirements are important. Depending on the amount being raised, entrepreneurs should be comfortable sharing their financial and intellectual property with the public. If neither of those are ideal, then one should shy away from equity crowdfunding.
What impact do you think equity crowdfunding will have on access to capital for diverse founders?
I think equity crowdfunding is an exciting opportunity for diverse founders to pursue their ideas. Founders launching companies in traditionally overlooked industries or less popular tech hubs around the country now have the ability to tell their story and garner early supporters. The capital raised can help entrepreneurs reach that first crucial milestone that eventually allows them to prove the viability of their business. In a venture capital system that funds less than 1% of black and brown founders, crowdfunding is poised to level the playing field.(theCut app screenshots. Image: theCut.co)
How do you plan to engage barbers in the equity crowdfunding campaign?
Over the last couple months, we’ve surveyed our users and many of them have expressed interest in investing. We have unique perks and offerings for barbers who invest in theCut. Using our social media accounts and monthly newsletter, we’ll be able to communicate the benefits of investing in the company.