What makes an equity crowdfunding raise successful?EntrepreneurshipFounder ResourceStartup Finance
Key highlights from this post. Read the full original post here.
Interested in equity crowdfunding to raise funds for your business? Over £400m has been invested into over 650 campaigns on Seedrs.
How do you make sure your campaign is successful?
Is equity crowdfunding right for your business?
- Do you have a strong community following your business?
- Are you confident that you’ll be able to secure an anchor investor prior to your raise going live on the platform?
- Do you have a clear value proposition that will resonate with potential investors and enable them to see the growth potential that your business offers?
If “Yes” to these, then equity crowdfunding could be the right option for your business.
Deciding on a realistic valuation and how much to raise
- You need to work out what your business is worth
- How much equity you’ll pass to investors in exchange for the amount of investment you raise
You need to provide evidence to back up any statements made in your pitch.
How much should you aim to raise? You should target to raise the amount needed to deliver on the next phase of your business plan, plus an additional contingency amount to cover unexpected costs.
Making the most of your pitch
You need to create the pitch that will be presented to investors, including elements such as:
- Your company’s achievements to date
- How the company plans to grow
- A sense of who you are as a company
- An intro to the team
- Why you started the business
- Why you think your company’s destined to be successful
Produce a video and images that bring your pitch to life
Clearly explain how your product or service works and the potential for growth. Include sequences that show your team, product or service in action, your successes so far and any unique selling points.
Marketing your campaign
You need to start publicising your campaign before it goes live.
Activate your network and maximise awareness of your business amongst your target investor base consistently.
Campaigns tend to run for up to 60 days so be fully prepared. Try to spend 2-4 weeks planning out the marketing needed to support your raise and the cash flow you will need.
Before going live to the public, begin drumming up interest from existing contacts and potential investors.
Spreading the word about your campaign
Continue reaching out to your existing community and address any concerns they may have about investing.
- Continue converting customers into investors
- Highlight positive news
- Keep your audience up-to-date with your campaign’s progress
A key part of promoting your raise is to successfully pitch your PR stories to journalists.
Here are a few quick pointers to get you started:
- Work out when you want coverage to land (consider lead times of the various publications)
- The press should go live when your campaign is public
- Create lists of journalists, influencers, partners, customers, angels and Venture Capitalists (VCs) who you’ll want to reach out to
- Focus on publications and journalists who are particularly interested in your sector or in early-stage businesses initially
- Send out stories that are interesting, concise and include a news hook along with details of your raise.
Boost through your own channels
Add details to your company’s website, social profiles, images and headers to let people know you’re raising and where they can find your campaign.
Encourage team members and influencers to talk about your raise to widen the net even further.
Feature imagery within your posts includes hashtags, tailor your messages to suit each platform and schedule posts throughout the campaign to ensure maximum exposure.
Leverage digital advertising
You can use digital ads to reach new audiences and retarget your existing website visitors to tell them about your campaign.
You can also supplement any social media to your existing followers with paid advertising across social channels such as Facebook, Instagram, Twitter and LinkedIn. You may also consider pay-per-click (PPC) ads.
You reached your target! What next?
If your campaign hits its funding target before the close, you can keep it open and overfund – raise more money than your initial target. Remember, you may need to release more equity in return for the additional funding.
Completing the transaction
When all of your capital has been received you need to complete the transaction. This will involve:
- Completing legal due diligence – e.g. ensuring your company has been set up correctly and that clearance for tax reliefs are requested
- Subscription agreement and articles – You’ll be asked to agree to a subscription agreement and other related documents
- Receive your funding – Once you’ve signed our straightforward subscription agreement and other documents, your funds will be transferred, minus the agreed fees directly into your business bank account.
Beyond campaign success
You should invest time in keeping your new supporters interested in your company. Sharing the progress and successes you’re making with this new injection of capital.
Keep your shareholders updated at least on a quarterly basis.