Some of the most important things that a business can do to make their equity crowdfunding campaign successful happen before the campaign is even created. Equity crowdfunding is a great way to raise capital for an early stage business but it needs to be done properly. I’ve seen startups make all sorts of mistakes, so I wanted to share some of the most important lessons that we’ve learned.
As the Chief Marketing Officer of Seedrs, I spend a lot of time speaking with entrepreneurs who are trying to raise funding. One of the most misunderstood but important parts of our business is the nominee structure. The nominee structure is designed to take care of the back-office investment details so that the entrepreneur can focus on hitting their funding target.
While picking the right crowdfunding platform is obviously important, it is also essential to approach your crowdfunding campaign in a well thought out and structured way in order to maximise your chances of success. In my experience, there are a few key things worth getting sorted before you create your crowdfunding campaign:
1. Do you have your team in place?
The team is one of the most important factors that investors consider when reviewing a campaign. Lots of investors will only invest in startups if they have a strong team helping run the business because it makes you look more credible.
2. Have you done everything that you can do without money?
Investors will want to see that you have been resourceful and proactive about growing your business. For example, researching the market, identifying potential competitors and understanding customer behaviour. Depending on the stage of your business, investors will want to see something to get them excited such as innovative marketing solutions and PR to increase the awareness of your brand
3. Do you have a marketing strategy in place to promote your campaign to investors?
Promoting your campaign to investors is a mix of personal outreach, online promotion and public relations. The target of these activities will be people who already know your business and want to be a part of it by becoming a shareholder and sharing in your success.
4. Have you talked to your own network of customers, friends, family and professional contacts to assess their willingness to invest?
Your immediate personal and professional networks are your most important source of support, advocacy and investment. Too many entrepreneurs assume that the crowd will fall in love without any prompting or effort.
5. Will you be able to create an exciting video to support your campaign?
Some founders are uncomfortable on video or want to hold back information about their business. Crowdfunding works best when you can tell a real and honest story.
Every investor in an equity crowdfunding round is an individual human being who has made the decision to back you because something about your campaign resonated with them personally. The best thing that you can do before starting a crowdfunding campaign is make sure that you are set up to win.
