Equity crowdfunding is now a leading form of alternative finance. However, its growth and popularity has led equity crowdfunding platforms, such as Crowdcube and Seedrs, to become saturated with hundreds of active campaigns at any one time.
Here’s how small, early-stage companies can compete:
Video – tell a story
Pitch videos are essential as they quickly communicate the key aspects of your pitch, presenting the look and feel of your brand, and provide that important human connection. Do not be tempted to create a vision which oozes expense, as investors might see it as a frivolous use of money.
For example, combining an engaging script with charismatic presenting and incredible editing, companies such as Gunna have produced pitch videos that are on brand, sell the investment, and give real insight into the founding team.
Consider your brand and core selling proposition. Are you big and bold or subtle and sophisticated? Are you selling a product or service? What are your business’s key benefits or differentiators?
Then consider what investors want/need to know. Is it the size of your market? A gap you’ve identified? Perhaps you have some high-profile investors?
Finally, work with a production company to pin down how you are communicating what and find low-cost ways to create an eye-catching video.
Offer unique rewards
Offer people something unique and they will contribute. Consider offering rewards at specific levels of contribution and make the contribution amount an odd number. For example, £1,700 or more. Investors will usually contribute a round number anyway and the point of perks is to encourage slightly higher investment amounts.
One of the best things about rewards is they don’t have to cost the earth. For example, NextUp Comedy offered investors membership subscriptions to their platform as a reward, helping the company raise 123% of its target amount.
Consider what makes your business unique.
Do you have an original product or service? Perhaps you are connected with some influential or famous people?
Identify your options and consider which are feasible and realistic, which investors might want, and which will cost you the least.
Ideal perks provide investors with additional value or an experience that money can’t buy.
Host an interactive webinar
Whilst investors appreciate the opportunity to ask questions, written Q&As can often be misinterpreted. A much better way to communicate is in person. Hosting an investor event is often one of the first ideas that come to entrepreneurs, but events are expensive.
Instead, we’ve found that a well-planned webinar can achieve the same result of informing potential investors and allowing them to meet the founders. Run a webinar around the middle of your campaign. By this time potential investors should have read your proposition and investigate the market and you should have received over 50% of your funding target.
Plan your event at the very start of your campaign for around the middle of your campaign and publicise it using an Eventbrite (or similar) page relatively early on.
Then take note of the questions investors ask during the first half of your campaign and build the webinar to address these concerns.
Finally, make sure there is plenty of time for questions at the end of the webinar. Never make things up ‒ if you don’t know, say you’ll check and provide a more detailed answer.
Bonus tip: Record the webinar and send it out as a campaign update.
Hire a professional PR agency
Likely to be one of the more expensive options on this list, but the difference it makes can be astounding. Every pound spent on PR works twice as hard ‒ raising brand awareness and gaining you investors in one go.
Good PR can position the founder as a thought-leader with unique insight and your company as one worth investigating.
The ‘trick’ is to consider what the reader wants, not what you want, and definitely don’t make it promotional. Include a bio and short summary of your business at the end and you’ll have a nice byline next to your article title and details of your business in the footer.
Perhaps this may not feel like enough to draw in investors, but trust me, it works.
Consider what advice or expertise you could offer. Do you have a unique story you can offer?
If, during your crowdfunding campaign, you committed to all of the activities listed above, you could spend as little as £2,000 to publicise your campaign.
In our extensive experience running equity crowdfunding campaigns, that £2,000 will result in an extra 20% or so of campaign funding. Even for campaigns at the smaller end of the scale (<£150,000) that could work out to as much as £30,000 in additional investment.
A small investment in your campaign could, therefore, result in a big increase in the investment you gain!
John Auckland is a crowdfunding specialist and founder of global equity crowdfunding communications agency TribeFirst. .He is also Virgin StartUp's crowdfunding trainer and consultant