Equity Crowdfunding Agency Founder Shares Tips For a Successful Crowdfunding Campaign
Varun Sharma's company Growth Turbine is an equity crowdfunding marketing and growth hacking agency that helps startups in SaaS, fintech, edtech, D2C, blockchain, healthtech and crypto raise capital through equity crowdfunding
Equity crowdfunding, the relatively new way of raising capital by offering securities to a group of people for investment, is a great way to take your business off the ground. This process of raising capital is gaining popularity after the passing of Jumpstart Our Business Startups Act, or JOBS Act, by former US President Barack Obama on April 5, 2012. The law intended to encourage funding of small businesses in the US by easing many of the country's securities regulations.
Furthermore, the Securities and Exchange Commission (the SEC) announced in November 2020 to increase the maximum amount raised through a regulation equity crowdfunding campaign from $1.07 million in any twelve months to $5 million--a nearly five-fold increase. It also increased the 12-month fundraising limit on Regulation A+ equity crowdfunding from $50 million to $75 million and increased individuals' investment limits in some cases.
Due to these recent changes in legislation, many startups are looking at the 'crowd' to fund their ventures. One company called Growth Turbine is redefining the whole "equity crowdfunding" by applying an engineering approach to marketing. Growth Turbine is an equity crowdfunding marketing and growth hacking agency that helps startups in SaaS, fintech, edtech, D2C, blockchain, healthtech and crypto raise capital through equity crowdfunding.
Why are crowdfunding marketing agencies emerging?
According to Varun Sharma, co-founder and strategic director of Growth Turbine: "The company was established in 2016 to apply an engineering approach to marketing. In simple terms, marketing has always focused on two important objectives; discovering customers' needs and desires, and then using that insight to create products or services that customers need."
Today, every pic we see on Instagram, every pause we make scrolling down the feed, every video we watch, every place we visit, etc., is recorded and stored. So, the idea behind Growth Turbine creation was to break the traditional approach to marketing of putting a lot of advertising muscle behind the products (which is a very expensive process) and instead leverage this data that is available to us and deliver robust solutions that deliver exceptional results on a shoe-string budget.
It's like the marketing madmen meet math-men to solve the advertising riddle unconventionally.
Growth Turbine is one of the many emerging crowdfunding marketing agencies, unlike the others, it is a marketing agency on paper, but in reality, it's more of a data company as everything that we do is based on data and market research. Presently, they apply the same data-based approach to equity crowdfunding and branding, Web development, and pretty much everything they do.
Equity crowdfunding and data-based approaches
Raising money through crowdfunding used to be the last option for startups. Not anyone.
By the end of 2019, equity crowdfunding was widely recognized as a viable way to raise capital, spurring more startups to launch campaigns. Big names in the VC world suddenly appeared as lead investors, and equity crowdfunding raised more than $100 million that year.
While many industries acutely felt the effects of the COVID-19 pandemic, equity crowdfunding experienced explosive growth. With new platforms, partnerships, and campaigns spawning every day, the industry saw more than $211 million raised in 2020.
In 2021 that amount doubled, and there's no sign of this growth slowing down in 2022 either. By 2025, the crowdfunding market is predicted to grow by nearly $200 billion, with a compound annual growth rate of over 15 per cent.
Still, according to Sharma, there are three things you would share with entrepreneurs for a successful equity crowdfunding campaign.
Here are Sharma's recommendations:
Do quantitative research first: I have seen a lot of startups who are trying to solve a problem nobody cares about. Before you spend thousands of dollars on product development, do quantitative market research for at least some of the basic stuff like:
- What's the size of my market?
- What product features do the users really need? Who is my target audience, and how do I find them without doing paid ads?
- Does my proposed solution have a "wow" effect on the users?
You can use simple tools like survey monkey to get quantitative data about all the above and find where your product-market-fit lies. This step is so crucial and often overlooked by entrepreneurs.
The rule of 20: Go to your community before going to VCs or private equity firms to invest in your startup. Your friends, family, LinkedIn connections, ex-customers, and email lists may have more money than the VCs. But, on the other hand, if your friends and family aren't willing to invest a small amount of money into your startup, why would someone who doesn't know you would?
I always go by the rule of 20.
If you don't have at least 20 first-degree connections willing to put in at least $1000 each into your startup, it's probably a good time to stop.
Connect with your community: One of the key reasons so many crowdfunding campaigns fail is that they don't really connect with their audiences. The issue might be with their core product itself, messaging, brand-positioning, or lack of care.
I always believe in the adage: "A in hand is worth two in the bush"
Suppose you can't take care of your existing community if you can't convert them to evangelists and brand loyalists if your approach is to spend thousands of dollars in finding more and more new investors/customers without first looking after those who have already invested their Time, Treasure or Talent (3 T's of investment) into your business. In that case, equity crowdfunding is probably not right now.
- Take time to write down those long emails and send them personally, if possible.
- Don't hesitate to up the phone and have a quick chat with your close community members.
- Share weekly updates on your progress, what plans you have, etc.
- Ask them to share your project on their social networks.