If you’ve been considering which is the best way for your business to raise funds in order to get to the next level, and are considering equity crowdfunding, but aren’t sure whether you’re ready, here are six things to check first.
- Can you succinctly explain the opportunity for potential investors?
Imagine your campaign is about to go live on an equity crowdfunding platform such as Seedrs. Would you be able to:
- Outline the opportunity – create two versions, firstly an ‘elevator pitch’ that sets out in no more than two lines what makes your business so investable and secondly, a longer version that tells more of a story.
- Give an overview of your significant business successes so far.
- Describe what the goals are for your business.
- Introduce the team you’ve put together.
- Can you explain in simple terms how the investors’ capital would be used?
It’s only natural that investors will want to know what you intend using their investment on. Be sure to get realistic quotes for whatever you intend to do, as investors are highly likely to closely check your figures. Perhaps add a contingency amount for each item you highlight. And of course, include the fees relating to the crowdfunding platform.
- Would you be able to recruit investors from your existing network?
Equity Crowdfunding platforms like Seedrs can be a great way to market your product and gain a new audience. However, it’s best not to solely rely on the crowdfunding platform you go with and their investor base to hit your funding round’s target. It’s worth noting that your own, existing customer base can often make the best brand evangelists and they can simultaneously provide validation for your product or service offering. Invite all the following potential investors to take a look at the pitch for your funding round:
- Any previous backers.
- Any high net worth (HNW) people you know.
- Your existing customers/clients – your community.
And of course, you should personally reach out to both friends and family.
- Are you ready to tap into the power of PR?
Be prepared to include PR as a significant part of your marketing support for your funding round. Create a list of the key publications that are likely to reach your target audience and contact the relevant journalists with your story.
- Could you keep potential investors updated throughout the raise?
To further fuel the interest in your raise, seize on every opportunity to put the spotlight on any new products or services you’re developing, any landmarks you reach throughout the campaign and any mentions you get in the press. It’s also worth highlighting any awards you win or any ways you develop your business during the round. For example, let potential investors know about anyone you hire, and what they’ll be doing.
- Are you prepared for the administration involved with a raise?
Raising funds via a crowdfunding round can be rewarding – as you raise capital and awareness simultaneously. Yet, it requires organisation and focus. In fact, it’s usually best to have a dedicated person to ‘own’ your campaign and all the associated activities it involves.
It’s worth noting that Seedrs keep the administration it involves to a minimum. This is in part thanks in part to the legal structure they use: the Seedrs Advantage Nominee.
Depending on which investment platform you choose, some businesses are surprised to learn that they now have potentially hundreds or even thousands of investors to gain consents from every time they attempt to action a significant decision, for example, raising further funding.
However, by utilising the Seedrs Advantage Nominee, Seedrs acts as the legal shareholder for all the individual investors, resulting in minimal added administration – or delays thanks to the complications created by having to seek and receive consents.
That really just leaves one final question… are you ready to crowdfund?