Equity crowdfunding is an exciting and rapidly growing alternative way of raising money for business growth, and something that many entrepreneurs are considering for their next funding round.
Crowdfunding is certainly an attractive route if you’re looking not only to raise finance, but also get the marketing halo that comes with putting your campaign in the public domain and attracting new investors that become your greatest brand ambassadors.
But let me warn you folks, a crowdfunding campaign is not EASY! Far from it.
Here’s a quick reality check on what’s involved, and how long it’s likely to take:
Getting investment ready
If you’ve already got all your pitch docs prepared – business plan, financial forecasts, pitch deck and exec summary – then fantastic. Otherwise, allow a good 4 weeks to get all this completed. Your business strategy might be all in your head, but getting it down on paper in a way that is clearly communicated to investors, written with their interests in mind, is no simple task. Do not underestimate it!
Critical point – before you launch a crowdfunding campaign, you need to secure at least a third if not more of the target you’re looking to raise in pre-committed investment. And ideally, this will be from some professional investors, not just friends and family. This will prove to the crowd that you’ve got serious backing, de-risking the proposition for them. It can take a long time to build investor relations, so the sooner you start working on this, the better. In fact, all good entrepreneurs know that investor relations is an ongoing job, whether you’re in the middle of a raise or not.
Campaign preparation
You’ll need a good few weeks to pull together your crowdfunding campaign strategy. This will include identifying and understanding your audiences, key campaign hooks, marketing messages, targets, rewards, marketing channels, publishing calendar, content, creatives, landing pages, and how the whole thing ties together. It’s a professional marketing job, so make sure you put professional resource onto this.
Your campaign video is critical – you have just a few seconds to get an investor’s interest and this is your main tool. It will take a good three to four weeks to find video resource, decide on a strategy, script, storyboard, film and edit this professionally.
You also need to meet with the crowdfunding platforms, negotiate a deal, prepare all your legals, and build your platform pitch. Again, a good few weeks work.
Campaign execution
Campaigns usually run for 30-60 days depending on the platform you go with and what works best for you. During this time you’ll be running your marketing campaign, which is a daily effort that will probably include social media, email marketing, platform updates, PR and investor events. You’ll be also be analysing the data, monitoring and tweaking your campaign. It will also be critical to push leads through to conversion by dealing with investors which will involve online Q&A, making phone calls and meeting investors. It’s an intense time.
Closing your campaign
When you reach your target, the work doesn’t stop. You’ll need to complete your marketing activities to tell your audience how the campaign went, analyse the whole campaign to understand and learn from it, and start building relationships with all your new investors. And of course, there’s all the legal and admin nitty gritty you’ll need to deal with, liaising with the crowdfunding platform and your lawyers etc; expect it to take a good 4 weeks before you actually see the money in the bank.
Oh, and by the way, you’ll also be trying to run your growing business as the same time! It’s easy to find that your revenue drops by 25% during the four-month campaign if you don’t have enough resource to support you through this critical period.
If you’d like support throughout your campaign, then please do get in touch at www.enterthearena.co.uk
