Equity crowdfunding is an increasingly popular method of funding for businesses. It allows entrepreneurs to harness the power of their own network by giving their friends, family members, customers and suppliers the opportunity to become part of the future of their business.
Shooting Star recently had the privilege of being involved in an ambitious initiative called Crowd10, which aimed to nurture 10 South West start-ups towards crowdfunding success. All 10 launched their equity crowdfunding bids in June and to date, five of them have reached or exceeded their target.
But if there is one thing we’ve learnt from working on the Crowd10 initiative, it’s that crowdfunding is much harder than it seems and it takes a lot of time and dedication to reach your goal.
However, there are ways to increase your chances of success. Here are a few tips we’ve picked up along the way.
Preparation is everything. Give yourself plenty of time and get all your ducks in a row before you launch your campaign. Make sure your financials are spot on, your business plan is up to date and get your pitch honed to perfection.
Build your network before the launch. If you secure lots of investments in the early days of your campaign, it will make you look more appealing to investors. This is only possible if you build your network ahead of your launch. You need to let everyone know in advance that you are planning to crowdfund and you need to prepare them for what’s coming.
A good video is a good investment. A video pitch is a must if you are crowdfunding. Take the time to get yours just right – it will be your main selling tool during the campaign and a great video, if it goes viral, could pull your whole campaign over the line.
Keep in touch. People lead busy lives and while their intentions are good, they will forget about your campaign. Keep sending regular updates throughout to both those who have invested and those who are still thinking about it. Let them know how the campaign is going and what’s happening with your business.
Make timely calls to action. Your campaign will be full of small landmarks, which you can use to your advantage. When you reach 49% of your target, invite people to help you reach the halfway point. When you have 99 investors, push to find the 100th. When you are within touching distance of your goal, ask who will be your all-important last investor. Remember that your crowd is rooting for you and they will want to help you reach these landmarks; it is your job to keep them informed.
If you decide to go down the crowdfunding route, be prepared. Engaging with potential investors will be relentless and all consuming for the entire duration of the campaign. But remember that while good PR will help your campaign succeed, a successful campaign will also be good PR for your business.
This post was originally published in issue 89 of Lincolnshire Business magazine.