MyCoolClass needs urgent help. Any ideas?
John Hayes
Public
Seen by 159
Hi everyone,
My name is John, founder of MyCoolClass Co-operative. I think many of you know us as Solidfund helped us out last year when we just opened our doors. Thanks again!
Unfortunatey, we have hit several brick walls recently and it's been quite devastating. We are on the verge of having to close our doors and am reaching out to everyone I possibly can. To clarify, this is not a proposal or an ask for Solidfund, but rather a call out for any possible resources and help.
Here's the story and situation.
Online teachers are gig workers who are often heavily exploited by platform capitalism just as Uber and Deliveroo drivers are. To provide fair work for online educators, MyCoolClass has developed a democratic platform to help independent teachers provide quality education to students globally in a variety of languages, subjects, and skills.
MyCoolClass is registered as a cooperative society in the United Kingdom and has been trading since July 2021. Everything was created with little more than sweat equity and donations from supporters. Our first year has been very busy and exciting as we have built MyCoolClass from an idea to an international organization. The founding team has developed nearly all aspects of the cooperative. Our 14 team members work efficiently together from six continents and have developed a positive work culture.
While our growth has been slow due to lack funding and the ability to market, we have kept moving forward and haven’t taken any steps back. We’ve developed a solid roadmap and tested the waters of our business.
In order for MyCoolClass to truly gain momentum and become a profitable business, we must raise capital through community shares to effectively market our teachers’ services and provide working capital for our team who has been working full time for nearly two years unpaid. We launched a community shares offer in April through Fundsurfer to raise a target of £300,000. We have since been able to raise £41,050 organically, however we will not be able to access these funds until we reach our minimum target of £100,000.
Without the ability to hire a professional marketing agency, it has been very difficult to reach outside of our “circle” in terms of marketing our share offer, especially as our teachers are spread globally and not concentrated in one country. We are offering 5% interest paid annually and UK investors can seek up to 50% tax relief with SEIS.
To be able effectively market our offer, it is crucial that we obtain £15,000 to hire a marketing agency. This will give us the reach and attention needed to hit our £300,000 target. Without hiring a marketing agency or getting significant media attention, it will be incredibly difficult to reach our minimum target and fear that we cannot in good faith extend our share offer in good faith that we can reach our minimum. After two extensions, our share offer is set to c this Friday.
Over the past six months, MyCoolClass has applied for multiple funding opportunities that would have been major gamechangers for us. Unfortunately, obtaining grant funding or loans have practically impossible due to the unique nature of MyCoolClass being as international platform cooperative as we are. While we are based in the United Kingdom, these funding opportunities have turned us down solely for the reason we are not predominantly trading or physically located in the United Kingdom. The fact is that no one has ever seen an international platform cooperative like ours before and somewhat in uncharted territory. While this is quite revolutionary and we have received plenty of positive feedback, well wishes, and support, we just keep hitting roadblocks simply based eligibility and technicalities. We have been turned down from Ethex and recently Reach Fund explicitly due to eligibility technicalities and not on our merits.
Our team has practically exploited ourselves the past two years as well as our teachers who have put their faith in us and have contributed to our cause. We know we have an amazing business that works, but afraid we cannot survive much longer without the ability to raise finance. We are very confident that we can raise, however we need a marketing/pr team to heavily promote our share offer in the UK and to get media attention.
MyCoolClass has a clear and solid roadmap to get where we need to be, and we’ve been working relentlessly to get funding around the world and running into the same issue. As we keep hitting roadblocks and time progresses, we have been struggling to cover operation costs without growth. While we are holding our first AGM in two weeks, we fear that we cannot survive much longer without urgently obtaining £25,000 to hire a marketing agency and to cover operation costs for three months while our offer is being promoted. We already have a marketing agency we’ve consulted with, and we wish to retain their services as soon as possible. Our team has full confidence that £25,000 will enable us to raise our target of £300,000 in which we can become a sustainable and profitable business benefiting thousands of teachers and students globally.
To raise £25,000 immediately, we can offer investors to either subscribe to loan stock with 5% interest paid annually and withdrawable in one, two, or three year terms.
The other option is to become an investor member through our community shares issue in which investors receive 5% interest paid annually and withdraw of capital targeted from year 3 onwards. Community shareholders are able to vote in elections and run for board of directors. UK taxpayers can claim 50% tax relief on their community share investment.
I am also willing to give the 60k in sweat equity debt owed to me by anyone who can save us from collapse that can be converted to shares in addition to the offer with 5% interest and SEIS.
I have spoken with all our advisors, consultants, and have approached many others privately with our situation and it looks like we've done everything possible. No matter how great everything else is, we are coming to realize that this is just the way the wind is going to blow.
I apologize for such a last minute and urgent call for help. We had been waiting to hear back from Reach Fund but just received the bad news the other which has drastically changed our position. Again, it was due to eligibility for not trading predominantly in the UK and lack of a physical UK presence.
Here are all our documents and financial statements:
Pitch Deck: https://www.mycoolclass.com/wp-content/uploads/2022/06/Pitch-Deck-v1.pdf
Share Offer/Business Plan: https://www.mycoolclass.com/wp-content/uploads/2022/08/MyCoolClass-Share-Offer-Business-Plan-2022.pdf
Financial Projections: https://www.mycoolclass.com/wp-content/uploads/2022/04/MyCoolClass-Financial-Projection-Sheet.xlsx
2021-22 Financial Statement: https://www.mycoolclass.com/wp-content/uploads/2022/10/2021-22-Financial-Statement.pdf
July-September Cashflow: https://www.mycoolclass.com/wp-content/uploads/2022/10/Cashflow-July-Sept-2022.pdf
Governing Documents (By-laws): https://www.mycoolclass.com/wp-content/uploads/2022/04/MyCoolClass-Rules.pdf
If you or anyone you may know have any resources or ideas to help us in this critcal situation, I’d be happy to schedule a video call and happy to answer any questions.
Thank you,
John Hayes
Simon Ball (Blake House) Fri 14 Oct 2022 2:02PM
Do you have any information about the marketing work you've done so far? How have you been able to get clients in the platform up to this point?
Of course it's not helpful for me to offer ideas when you're in the middle of fighting a fire (probably all coops fight fires on a consistent basis), but there may be steps you could take to grow your userbase without exerting a lot of time pressure and spending money. Presumably if the userbase is growing organically, this will alleviate the need to spend a great portion of your time searching for finance offers.
Jeff Regino Thu 13 Oct 2022 7:00PM
Hi John, I regret your result but I expected it 7-12 months ago. Back then, I indirectly dissuaded one of your founders from launching that crowdfunding campaign, because I knew you weren't ready.
Do you have direct contact with your donors/investors on Fundsurfer? If so, I suggest you contact them ASAP, ask for their emails, and request them to invest directly, if that's possible. I plan to invest in MCC in the near future.
You have much better traction and progress than my startup, and I believe (and I think you do too) that you're just at the brink of MCC's rise/success, so I highly encourage you to reconsider shutting down MCC's operations fully. "Two years of exploiting yourselves" is honestly nothing, compared to my experience.
Do you have Facebook? I've connected with you on LinkedIn.
John Hayes Thu 13 Oct 2022 3:02PM
This wouldn't work as it doesn't allow democratic control if all directors must have Estonian e-citizenship. We already trade internationally and have many EU students.
Sam Toland Thu 13 Oct 2022 12:02PM
Hi Billy, do you have any practical cases of this working? We looked at this years ago and despite promising words and all the rest of it, it was actually practical to form in Estonia under this model for anything other than sole proprietor freelancing businesses.
Anything co-operative could not avail of the streamlined processes etc.
Billy Smith Thu 13 Oct 2022 10:16AM
L'esprit d'escalier:
I may have mentioned this before, but E-Citizenship via the scheme in Estonia would give you the option of trading within the Schengen Area whilst operating internationally.
https://www.e-resident.gov.ee/become-an-e-resident/
https://www.e-resident.gov.ee/start-a-company/
One of the organisation structures available in Estonia is the Commercial Association, in Estonian (ühistu), that can be used as the legal basis for a mutual association, which can be incorporated as a co-operative.
https://learn.e-resident.gov.ee/hc/en-us/articles/360002468417-Forms-of-business
This would also require the founding members to all be registered as E-Citizens.
Graham Thu 13 Oct 2022 9:23AM
Couple of other thoughts: I'm involved with https://meet.coop - also a multi-national platform coop and also seeking to build a sustainable approach in the face of some of the barriers that @Sam Toland outlines above. In that case, the operation is pared down and hyper-lean, with enough recurring revenue to tick over and fund some marketing activity. This might be an option to consider to avoid winding up and losing all of the infrastructure and goodwill that you have built. Also worth engaging - if you've not already done so - with Trebor Scholz and the platform cooperative consortium: https://platform.coop they may have useful contacts that could assist.
John Hayes Thu 13 Oct 2022 2:57PM
Thanks Graham,
We launched our share offer with the goal of being listed on Ethex which we planned to do initially in April. Ethex even gave a letter stating they would list us pending review of our documents so we could apply for SEIS. We applied in February with the help of Dave Boyle and were expecting an answer in 6 weeks. It ended up taking almost 12 weeks and they turned us down for the same reason being most of our members and trading is not in the UK, not our merits. Same as Reach Fund and every other grant and loan we applied for. We are "too international" and do not predominantly benefit UK citizens.
This was a huge blow and we did self-host our share offer where we raised 20k. To get more exposure, we moved to Fundsurfer and raised another 21k. We cant use the funds until we reach our min raise of 100k or close our offer and reopen it with new terms and hope everyone will still be on board, but this can take months with submitting to FCA and then getting approval for SEIS.
The 41k we raised organically from our own promotion is also coming from teachers promoting from around the world. The fact is that we do need to heavily market our campaign, we always new this and tried our damn best without a marketing budget while we spent the last six months looking for money to market. It's not that we are late, but rather hitting brick walls.
I have reached out to our investors however the bigger ones are committed as long as we raise our minimum and the others are small from working class teachers who cannot invest more.
Graham Thu 13 Oct 2022 9:05AM
Hi John. It sounds like you've left it a bit late to allow much time for action. To be honest I had assumed that you had achieved your target months ago because I didn't see anytihng of a marketing campaign to encourage investment beyond an initial flurry when the offer was launched. I've not come across your chosen funding platform before. Many orgs doing community share offers in the UK choose Crowdfunder or a self-hosted solution. Bigger ones often go with Ethex (not cheap, but known to have a strong community of seasoned impact investors), but I see you've already been down that road.
You probably aren't eligible for https://www.uk.coop/support-your-co-op/community-shares/support/booster-fund/apply but might be worth talking to them if you've not already done so.
If you have access to contact data for the people who have backed you in Fundsurfer, maybe you could let that campaign end and re-launch with a structured marketing campaign giving more time to raise awareness.
Community share offers that aren't place-based can struggle as its harder to develop and engage a strong community of interest.
Have you talked to https://loanfund.coop?
It looks from your pitch deck that you have built some traction since launch, but don't have many students/customers on the platform yet (compared to the number of teachers). Debt finance to drive that marketing effort looks like a good short term option to get you to sustainability if you've got a solid business plan that a lender can get behind.
Also you've been caught by the rise in interest rates. A few months ago a 5% return was very attractive. Today, not so much.
Sam Toland Thu 13 Oct 2022 9:00AM
Feel your pain @John Hayes - I was involved in a 'global-first' platform co-operative for a number of years, and ran up against most of the same barriers that you have. We also ran into the absolute headache involved in operating a business with minimal amounts of activity in many jurisdictions, setting up branches in different states, VAT and HR and payroll taxes for a distributed team... ugh.
The big lesson of the 'global-first' platform co-operatives was... it is a very high risk proposition that is predicated on very high levels of rapid growth where your turnover and free cash grows at a sufficient rate to cover all this ever increasing administrative overhead.
I am reluctant to say this can't be done in the current climate by a capital intensive co-operative - but it is very high risk, and I personally would avoid this model in future.
Consolidate your areas of operational activity
Can I ask, have you spoken to the likes of Ethex and Reach Found and other services/supports you were hoping to utilise and asked what level of activity in the United Kingdom would constitute sufficient activity to warrant a re-assessment of their position?
I would be rapidly assessing whether you can pivot in the short term to building any kind of business in the UK in terms of shifting administrative activities, sourcing teachers or pupils etc.
Strategically, I would suggest you need to broadly speaking concentrate your activities in a number of jurisdictions if you have not already done so, and target requests for support in those jurisdictions. Are there funders/investors in those jurisdictions that share the desire to address the problems you are identifying and wish to support them.
I am working with a worker co-operative that has a mission of providing decent employment for migrant women, who have been able to source significant enough funding from local and internal funders to support their start-up phase for example.
Perhaps there are foundations (based in home jurisdictions of your members or in the United States) who support your mission. Can I also confirm you've connect with the American worker co-operative movement? - I believe that certain funds that been channeled to support co-operatives with missions abroad.
https://www.theworkingworld.org/us/
More particularly, if the UK is going to be 'home base', strategically regardless of anythimg else, I would suggest you need to have some footprint there to be able to avail of the supports and services that you need to draw down on - it appears that if there is no business case whatsoever to operate in the UK, then it appears that the UK as a flag of convenience for a global co-operative has been shown to have limited value in the current context (without changes in regulatory approach or in the approach by providers/supports like Ethex or your prospective funders based in UK).
We live in a world of nation states
While a small subset of multinational companies have made some strides in sidestepping national jurisdictions (and I would suggest they have adapted to them rather than sidestepped them), the reality is for 99%* of human activity is governed by rules, laws and norms constrained by national boundaries and most international activity is built on the foundational rules, laws and norms of the nation state they operate from.
The platform co-operatives that I have seen get the furthest in recent years have been those that have focused on a single national or regional market where they can concentrate support/funds and keep administrative costs down, or that have adopted distributed/federal models (often based on open source platforms operated by national co-operatives).
Once again, feel your pain here, and apologies if I've stated the obvious here or given feedback which isn't very helpful. But given you asked, I thought I'd give you what my experience has given me to date.
* 99% is hyperbolic, for effect.
John Hayes · Tue 18 Oct 2022 4:58PM
Half of our students came from teachers who brought them to the platform. We also have a presence on Chinese social media and a Chinese member who has been organically driving traffic to bring the other half. Most of our students and located in China, followed by Poland, Spain, and Argentina. While we are slowly growing, it is far too slow to be sustainable in a reasonable amount of time. With online education, digital marketing is crucial. While our teachers also market themselves, it is still not to drive the traffic we need.