Equity crowdfunding has proven to be an exciting alternative for entrepreneurs to raise capital. Startups and companies can showcase their offering and their benefits in exchange for funding or democratizing the investment landscape.
While crowdfunding holds immense potential, CEOs must be aware of the realities of and misconceptions surrounding an equity crowdfunding raise. Nothing happens overnight. It takes patience, research, and dedication to run a successful campaign. In this blog post, we will highlight the expectations vs what equity crowdfunding is actually like for CEOs to raise capital effectively.
Expectation 1: Quick and Easy Funding
Reality: Managing a successful campaign requires time, effort, and meticulous planning. As a CEO, you should approach crowdfunding with the same effort as any other fundraising method.
Time-consuming, but essential:
Building investor trust: Why should Investors care about your investment? What type of legitimacy and confidence does your company give investors to make that initial investment?
Showcasing the investment opportunity: When it comes to marketing your equity crowdfunding raise, it's imperative to talk about important partnerships, industry stats, market opportunity and whether or not your industry has exponential growth.
Executing a comprehensive marketing strategy: Focus on a strong pre-launch campaign with an emphasis on audience building. Invest in Facebook advertising and fully optimize at least 3 separate social media platforms. Keep in mind, these posts should be structured and tailored to appeal to an investor audience and stay away from “product focused” messaging.
Expectation 2: Minimal Marketing Efforts
Reality: Marketing allows potential investors to have multiple touchpoints before converting. Studies indicate that it takes an average of 7-17 touchpoints for investors to fully commit to an offering. This means that on average, an investor won’t always invest initially the first time seeing the investment. Historically, we see that the vast majority of investors invest within the last 48 hours of a campaign.
Always prioritize marketing efforts that emphasize the investment opportunity rather than solely focusing on the company's product. Shareholders want to know why it's a good investment… not why it's a good product to buy.
Key Strategies for Successful Equity Crowdfunding Campaigns:
Develop a Comprehensive Marketing Strategy: CEOs should consider a multi-channel approach to reach potential investors. This includes utilizing advertising, social media marketing, email marketing, and portal updates. A well-rounded marketing strategy helps build brand awareness, educate investors, and establish credibility.
Craft Compelling Investment Messaging: Investors are primarily interested in the financial potential of their investment. Focus on communicating the growth opportunities, market potential, and competitive advantages of a company. Presenting a clear, compelling investment thesis enhances the campaign's appeal to potential investors.
Engage with Investors: Actively engage with potential investors through social media, webinars, and networking events. Regular updates, prompt responses to inquiries, and demonstrating transparency create trust in a supportive investor community.
Leverage Partnerships: Collaborate with industry influencers, complementary businesses, and existing investor networks. Partnerships can amplify your campaign's reach and credibility, leveraging the network and expertise of your partners.
Build Your Community: It is vital to maintain a strong relationship with existing and potential investors. Building trust creates long-term relationships beyond the campaign.
How to make investors feel involved and valued:
Timely communication
Regular updates
Providing insights into the company
Managing Expectations is Crucial: Don't count your chickens before they've hatched. You will not see a consistent weekly turnaround- that is the gamble and nature of equity crowdfunding.
3 Stages in an Equity Crowdfunding Raise
CEOs should start by focusing on reaching out to their network of friends and family. These individuals are often the first to show support. They can contribute to the campaign, laying a foundation for future success.
The midway point of the campaign, or “campaign lull” often loses momentum in terms of investment activity. This phase can be challenging, and many lose hope in the process. At this point, it is imperative to focus on remarketing. The goal is to warm up your audience to rebuild that momentum.
The end of an equity crowdfunding campaign is where the highest return on investment (ROI) can occur. As the campaign deadline approaches, a sense of urgency often motivates potential investors to take action.
Finish out strong! Leverage the momentum of the campaign's end, engaging with investors to increase those conversions.
Test, Optimize & Scale with DNA Today!
Remember, it's important to eliminate misconceptions and understand the realities of running campaigns. With the proper knowledge, patience, and guidance, crowdfunding can be a rewarding experience. Increase your chances today, and optimize your campaign with Digital Niche Agency!