4 Key Tips in Running a Successful Investor Crowdfunding Campaign

At DealMaker we live and breathe equity crowdfunding - it’s part of our DNA. Over the years we have had many lessons learned as to what will help make a successful crowdfunding campaign. Here are the most common mistakes we’ve seen founders and companies make:

1) Their customers, fans, or community comes second.

 For equity crowdfunding to reach its full potential - the crowd, or your community, is not only a key source of capital, it’s the heart of your future success. Having people believe in what you are doing so much that they put their money where their mouth is, should come second to nothing. Your investor pool is your most important asset class - treat it as such. The most successful founders have already built a community before they launched their crowdfunding campaign AND they properly nurture it - not just during the raise, but before, during, and after. 

If you don’t have an engaged, passionate, and vibrant community, crowdfunding (depending on your raise goal) may be challenging, given the need to spend ad dollars to acquire investors. Whether or not you choose to raise via Reg CF or Reg A, remember that smart founders  focus on building a community of fans and customers to join them on their disruption journey. You’ll find out that this community will help every single aspect of your business and be your BIGGEST competitive advantage in the future. Just look at Taylor Swift as an example of the power of community - read our Swiftie Playbook for all the lessons needed about community building. 

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2) The company doesn’t have a clear mission or purpose.

 Simon Sinek famously said ‘Customers don’t buy what you do, they buy why you do it.’ Today’s investors look beyond the product to the overall raison d'etre of the company they are investing in - you have to connect with people and the vision they want for the world. More and more investors are seeking to make purposeful investments that generate financial returns, while also helping to achieve social or environmental benefits — exemplifying the idea of “doing well while doing good.” 

With a strong and compelling mission that resonates deeply with people, your company, campaign, and mission will be noticed, and passionate, like-minded people will join your journey. Even if these people don’t invest in your raise, knowing your campaign has attracted potential customers and fans that feel your message resonates with them is a huge benefit that cannot be understated. .

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3) Their storytelling is a FLOP.

 Storytelling in investor acquitision needs to be mission-driven, clear, and inspiring - your story needs to grab the attention of your audience and convince them to part with their hard-earned cash.. You could have a revolutionary world-changing product, but if the story is confusing or not compelling, no one will invest. In the age of social media, remember , you have seconds to grab the attention of someone - and when you have that attention don’t let go. People want to feel connected to both you as a founder and your story of what you are trying to solve.  Remember too, that people inherently support people more than concepts, so the personality of those behind the business needs to shine through.

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4) They don’t give back.

Crowdfunding isn’t the same as normal investing - it is much more a two-way relationship. Your community will support you, but you have to also show them how valuable they are to you - they’ve backed you - don’t make them regret it by never communicating with them again. Giving investors incentives such as warrants, exclusive product offers/expereinces, bonus shares, and more are great ways to show your investor pool just how key they are to your continued success. Investors will turn into repeat investors with a little incentive and regular communication - which ultimately drops the cost of capital significantly. .  

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Conclusion:

Investor Crowdfunding is the turn-of-the-century investment method that will change the way founders think about building their business. Having this option for alternative financing has a two-fold impact: 

1. It’s ad spend that not only acquires investors but customers and prospects as well. It’s building a kind of ‘fanbase’ of support for your journey and your brand.
2. Terms of the deal are up to you. Founders realize that traditional institutional capital comes with a LOT of terms that benefit the VC or fund, and can even go so far as to reliquish control. This is not the case for Equity Crowdfunding - which have much more ‘Founder Friendly’ terms.

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If you are considering raising via Reg CF or Reg A+, make sure you:

• Understand the value of building your company's ‘fanbase’ - whether they invest in this round or not - that asset class is your future
• Understand how critical storytelling is to meeting/exceeding your raise goals. If you are going to spend on advertising, don’t get in your own way and dilute the messaging.
• Investors and prospective customers could be one and the same. Expand how you think about LifeTime Value as a founder and look to engage and re-engage with your community accordingly. A prospect that didn’t invest this round could be your biggest investor in your next round, and one of your most valuable customers as well.  

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