As online equity crowdfunding becomes an increasingly popular way for early-stage businesses to access essential funds, how can new enterprises take advantage of the opportunities this fresh take on fundraising offers?
While the business landscape around us continues to evolve, if there is one certainty within the world of business that remains as important today as ever, it’s the necessity for companies to have the funds required to fuel growth. Whether it’s one day, one week or one year after launch, many entrepreneurs will seek investment to help them accomplish their professional goals and give their company the platform it needs to develop.
While the concept of crowdfunding has existed for centuries, the digital age has spawned an entirely new fundraising platform and, as a result, a new breed of investors. No longer the preserve of uber-rich angel investors and venture capitalist firms, the opportunity to invest in a growing business is now available to the everyday taxpayer – and it’s all thanks to equity crowdfunding. For ambitious entrepreneurs in search of a crucial cash injection, equity crowdfunding can be a blessing and a curse – but in today’s article, the private equity specialists at Current Capital will help you figure out whether this form of funding is right for you.
A popular misconception of the equity crowdfunding experience is that, by signing up to these sites, investors can cut out much of the admin associated with raising finance. While the process differs in its challenges and needs, it’s crucial to remember that equity crowdfunding is not the ‘easy way out’ – so make sure you put in as much effort as you’d like to see in return.
Display the benefits to investors
Putting yourself in the shoes of potential investors is a crucial step unfortunately missed by many entrepreneurs on the hunt for finance. Consider the benefits your backers can expect in exchange for their investment, and really sell these advantages to make investment in your company as appealing as it can be. While you will be selling a stake in your business in return for money invested, it’s also worth sharing the clear growth path that this investment will fund – how will your investors’ support help you to reach your goals and targets? Supporting enterprises is an honourable thing to do, so you should be transparent as to where and how investor funds will be used.
As a growing business, it’s also worth looking into the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) to find out whether your company is eligible. At no cost to you, the benefit for investors comes in the form of EIS and SEIS tax relief – which makes investing in your company all the more appealing for those looking to catch a tax break. It’s worth noting that the rules and regulations for both schemes are stringent, so take your time and do the necessary research before applying.
Connect with your audience
A core principle of raising any form of finance, equity crowdfunding is founded on a sense of trust between investor and investee – so forging genuine relationships with investors should be top of your agenda if you’re serious about fundraising success. Though it may be a while before you meet face-to-face with your investors, such is the nature of online crowdfunding – and creating a sustainable level of mutual trust starts from the moment they first encounter your brand.
To truly engage with investors, you need to initiate a ‘connection’ – prove to them that you’re passionate and you’re ready for investment, and let your business plan do the rest. One popular way to create the building blocks for these relationships is to put together an informative and engaging fundraising video – allowing you to educate viewers on your business in a visual format and instil a sense of understanding on both an intellectual and emotional level.
Get in front of the people who matter
Consider the core marketing tools you can use throughout your equity crowdfunding campaign to generate some momentum, and incorporate these tools into your wider promotion plan. An essential component of any digital success story, staying active on social media should offer a solid foundation – allowing you to engage with your audience and draw them into your campaign. In the age of online crowdfunding, ensuring you maintain a vibrant and active digital presence is utterly crucial – so take time out of each day to post across your various social media accounts, or set up a schedule in advance so that you can continue spreading the word about your fundraising campaign.
Raising finance is part and parcel of launching and growing a company – and unless you personally have the funds to bootstrap your business, it’s likely you’ll have to explore the fundraising avenues open to ambitious entrepreneurs.
Of the available options, equity crowdfunding perhaps presents the most exciting opportunity when it comes to creating lifelong brand ambassadors – as well as making sure investors are appropriately rewarded for taking a chance on your startup.