Angela Faherty talks to the founders of social cause crowdfunding platform Chuffed about the company’s rapid success and future direction.
Spotting a business opportunity in a volatile economic environment and choosing to pursue it is a risk many people may not be willing to take. For Prashan Paramanathan, chief executive officer and co-founder of social cause crowdfunding platform Chuffed, it was a no-brainer.
Inspired by a stint working for the International Finance Corporation helping to set up microfinance banking for farmers in western China, Paramanathan realised he had no real desire to return to his early career as a management consultant on his return to Australia.
“I’ve got a mechatronics and biomedical engineering degree, but working in China was a life changing experience for me,” he says. “Not only did I get to understand how little I knew about China and how it worked, but most importantly, I got to understand that you could have a life career in an interesting social sector.”
Using his skill set to land a consultancy role at Social Ventures Australia (SVA), Paramanathan found himself working with not-for-profit (NFP) organisations and corporate social teams on a range of projects designed to help drive greater social impact by helping organisations get better focus on the impact they wished to have on the community.
A meeting of minds
It was here Paramanathan met Olivia Hilton, managing partner of the consultancy team, who had come to the role through a fairly lengthy career in management roles in the IT and telecommunications sector.
SVA grew significantly over the following five to six years, increasing its staff base from 20 to 30 people across Sydney and Melbourne. It was here that Paramanathan identified a gap in the market both in terms of awareness and connecting with the consumer.
“We realised that we were working with a whole swathe of small to medium-sized NFPs and they were all doing incredible work but no-one had ever heard of them. Our friends were all working professionals whose entire interaction with these firms was getting harassed walking down Martin Place in Sydney or Bourke Street Mall in Melbourne. We spotted a real need to connect the sector with these people who were switched on and willing to contribute, but in a way they enjoyed and got value from,” he says.
This was around the same time the concept of crowdfunding was starting to take off and Kickstarter was gaining traction. “I wondered if there might be a way of taking those ideas and adapting them to the NFP sector and creating an offering tailored to social causes,” he says.
The result was Chuffed, a crowdfunding platform for socially-conscious projects around the world. It offers support for individuals, not-for-profits, social enterprises and community groups to run crowdfunding campaigns for free.
“I knew Prash was up to something when he would come into work incredibly tired and seek out a meeting room to nap in at lunch time,” says Hilton. “Then he told me his idea and I loved the thought of being able to use technology to enable donors such as ourselves to connect with a variety of organisations and to help many of the smaller organisations raise funds in a low cost manner.”
With the seeds of a future business in place, Hilton and Paramanathan needed funding to get the venture off the ground, so using some of Hilton’s networks, the pair set about garnering financial support for the concept.
“I was able to put Prash in contact with a range of people and before we knew it, it looked like it was more than just some ideas on a piece of paper. It was something that had a real future and Prash was someone who had the drive, passion and knowledge of both the sector patterns and technology to make it happen,” Hilton says.
Launching in October 2013 with a $460,000 investment over two years from the Telstra Foundation, the company hit its first $1 million in donations within 11 months. The second million dollars in donations came within five months, the third in three and a half months and the fourth in just over two months.
“We had the most privileged start to start-up life possible,” says Paramanathan. “We had cash upfront, we could pay a salary and we had no equity payoff down the track as we were structured as a charity.”
Two years since its launch, the company is now expanding offshore, with a presence in the US and the UK, and both Hilton and Paramanathan admit their working relationship is evolving as the business grows.
“ At the beginning, Prash was very analytical,” Hilton says. “He’s incredibly intelligent and very good at problem solving, whereas I am much more action orientated, so it was a good partnership. But in the fast paced environment he has learned pretty quickly that you don’t have as much time to analyse every single problem.”
Paramanathan agrees. “When I started, one of the things I had to learn very quickly is that you may have a list of 70 things to do, but you will never get through them all. Getting the balance right was a big learning curve for me, and I admired those qualities in Liv. She has run a publicly listed tech start up before, so she has a wealth of experience and is exceptionally good at getting through a huge amount of work but still keeping her eye above the parapet to know what is coming down the line,” he says.
As the business continues to grow, the roles Paramanathan and Hilton play at Chuffed are also set to evolve.
Paramanathan is likely to be spending more time overseas as the business grows offshore, while Hilton admits she regularly questions her role to ensure she is still providing value at every stage of the company’s development.
“At the moment we can still see the value provided by the different members of the team,” she says. “But very quickly we will need to bring in people with additional expertise around issues such as equity raising, technology and experience with growing start ups. Particularly as the business continues to evolve.”
Paramanathan agrees. “The concept of CEO and chair is not really a traditional role in tech start ups, everyone talks about co-founders instead. We are both aware of how the business is progressing, but as the organisation scales, we have to think about the next stage of the relationship,” he says.
He adds: “Currently there is a blur between what you’d call traditional management and governance roles. So far, it’s worked, as adding in a layer of governance typical of larger organisations can stifle small entrepreneurial companies.”
But with plans to scale the business both domestically and globally and growth targets to be the number one social cause fundraising platform in the UK within two years, things are likely to change.
“ Now we’re figuring out how to expand overseas and raise another round of finance, we have started to think about whether we’ve got the right corporate structure for what we want to do. This is a really interesting governance process – how do we change our structure to suit our ambition?” he says.
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