Having been involved in capital raising for several private and public companies in the past, I can say from experience, raising capital for your business is all-consuming. You have to be prepared to pursue different options and select the one that suits your type of business and your goals.
If you are about to embark on a capital raising mission and you are considering equity crowdfunding, I’ve compiled below five of the most effective ways to prepare your company for the best crowdfunding campaign possible.
- Clarify your business and capital-raising objectives
Ask yourself what you want to achieve with your campaign besides raising capital. Acquire new customers? Increase brand awareness and reach? Tap into the expert knowledge base of angels, VCs, or other investors? Clarify your goals before you start.
Build your business plan with sensible milestones; how much money do you need to raise and how far is this going to get your business? What will be your next value inflection point and how much do you need to get there?
Do you have the marketing and PR capabilities to run your campaign? Do you have the funding to hire support? Knowing when to outsource – and who to – can save you precious time and resources when it matters most.
Does a crowdfunding campaign support your long-term business goals? If more customers (as opposed to just more investors) is high on your agenda, crowdfunding is a great option to consider. - Find the right crowd-sourced funding platform
Different equity crowdfunding platforms have different characteristics; some focused on direct-to-consumer businesses, some collect smaller individual investments others focus on wholesale investors. Some platform managers provide extensive pre and post-capital raising support, others don’t. Identify what you need for your business and choose a platform that caters to your specific needs by talking to the different equity crowdfunding platform managers. - Do your research on what works and the requirements, including time and resources
Review campaigns of companies similar to your own; same industry, size of capital raising or customer profile. How did their campaigns perform? What worked for them and what didn’t? Take time to assess what will be required, how much time needed to spend on marketing, and respond to investors’ questions.
If you’re gravitating to a specific platform, gain some insight into the demographics and behaviour of its user base (specifically investors). Understanding your potential backers can help you tailor your campaign and communication strategies to most effectively engage with them. - Communicate with your stakeholder base to ensure they will continue to back you and will support your fundraising campaign
If you have existing backers or other important stakeholders, such as investors, suppliers and customers, communicate with them regularly and clearly about what you are doing, why and how this will benefit their interests. Approaching them with confident transparency and focus are likely to encourage them to support you. Preparing a clear pitch deck outlining these details will help existing investors in providing you their support.
Importantly, you should show how a crowdfunding campaign will align with your company’s growth plans, how it might enhance the value of their investment, and how it could provide opportunities for further market validation or expansion. - Be prepared, get ready
Ideally, in any capital raising, your business is in top shape at the time of seeking funding. Your revenue/profit should be maximised, your team dedicated and complete, and you should demonstrate plenty of opportunities for growth. Your board and management, your team, as well as your advisors must be fully aligned and on board with your campaign.
Once all of these are done, it’s time to start building momentum across your networks and on your favoured social platform/s. This is the time to bring in your experienced marketing team and fully engage with your crowdfunding platform managers to ensure that you maximise your company’s exposure. And finally, enjoy the ride!
