5 Secrets to a Successful Equity Crowdfunding Campaign This platform opens up new funding for businesses but success requires good communication.
By Geri Stengel •
Opinions expressed by Entrepreneur contributors are their own.
Funding your startup or growth company through equity crowdfunding platforms has the potential to raise money faster and more efficiently than other venues. The beauty of going down this route is that it makes the fundraising process seamless from the initial contact through closing the deal.
Here are five strategies that will increase your likelihood of success.
1. Build your network before you need it
Advertising that you are raising capital from accredited investors significantly expands a company's traditional investor pool, but the reality is that the vast majority of funds raised come from the founders' networks and connections.
Related: How to Pick Equity Crowdfunding Investments
When searching for investors, the size of your network matters. The larger and more diverse it is, the more likely your business is to grow big and the more likely you are to have investors already within your network or people who can refer you to them.
Start increasing your network at least six to 12 months in advance. Building some of these relationships, especially with influencers -- investors, media and people who know them -- can take upwards of two years to develop, so start early.
2. What you communicate matters
Communicating clearly -- without jargon and spin -- is of critical importance when marketing your securities offering online. As a founder, you must communicate that you are trustworthy. Do so by being candid and open in all your communications, from blogs to e-newsletters to tweets. Let investors know what your values are so you attract investors who are a good fit for your company.
Related: The ABCs of Equity Financing
3. Tell a good story
Investors are not all about PowerPoints and spreadsheets. What investors really want to find is people who are aligned with their beliefs and values. PowerPoints and spreadsheets don't convey this: stories do. The story behind your "why" is what hooks them. Reel them in with your projections and implementation plan. Paint a picture of the dream, the vision of where you're going. Investors want to know why you and your team are the right people for their investment.
Tell your story in a clear, engaging manner that allows people to get to know you, feel your excitement, and want to become part of it. Video is a powerful way to do this.
4. Choose your marketing tactics strategically
It isn't one size fits all: Your marketing vehicles may include social media (blogging, LinkedIn, Twitter, Facebook and Instagram), phone calls, in-person networking events and public relations. Regardless of the channel, reach out regularly and consistently to potential and current investors to keep them informed about your company. Also, don't forget about doing an e-newsletter. As you move a prospect from cold to warm, make the outreach personally, using the prospect's preferred method of contact, which could be email, phone, in person or a combination of all three.
Be strategic: You don't need a blanket presence on social media. Pick the ones where your investors and supporters are likely to be.
Match platform to purpose: Use LinkedIn to update your connections. You can also post a blog. Use Twitter when you want to update many people at once. Regardless of which media you use, make sure you communicate frequently and that your message is clear.
5. Show momentum
If you want to succeed at crowdfunding, you have to show support from the get-go. Investors are likely to stay on the sidelines until they see that others have anted up. Before you launch, identify the people you think are likely to invest. These include family, friends, colleagues, customers and suppliers. Target them even before the campaign begins. That way, you establish that all-important momentum and are more likely to succeed.
Related: Raising Millions With Equity Crowdfunding Will Cost You, But How Much?
