The content of this article has been adapted from Equity Crowdfunding: The Complete Guide For Startups And Growing Companies, launching on Amazon on November 1. Invesdor subscribers can download the entire book for FREE, this week only. Click here to download.
When looking at successful campaigns, the big question is always: “how did they do it?” So I wanted to share a couple of success stories who have funded on Invesdor, and reveal some of their critical insights. If you want to do a campaign of your own, these tips could help you replicate their success.
The two campaigns are Heimo (an empathetic online community) and EkoRent (a provider of for-hire electric vehicles). Each of them raised over €170,000 through Invesdor. Let’s hear directly from the founders – Jarno Alastalo and Juha Suojanen about what they said worked for them!
1. Commit to crowdfunding!
The crowdfunding process is very time-intensive. If possible, you should prepare and run your campaign at a time when you have a clear run at it – not when you are concurrently trying to do anything else, such as a major product launch.
Equity crowdfunding can be a great focal point for building your company’s profile. Because you have a campaign to do, a story to tell, and an objective to achieve by a specific deadline, your team will get the chance to pour their energy into promoting the business in a way they wouldn’t do normally. Don’t waste this opportunity – give it your full focus. “For us, crowdfunding was 50% about the money, and 50% about the marketing,” says Jarno Alastalo, the CEO of Heimo.
2. Don’t just rely on social media
A frequent mistake I see is company founders trying to conduct their campaign entirely from behind their computer screen. Just because the crowdfunding platform is online doesn’t mean you shouldn’t spend effort offline too.
Social media can help, but it shouldn’t be your only tactic. In general, it is less important in equity crowdfunding than in rewards crowdfunding (on platforms like Kickstarter and Indiegogo). We have all heard of the rewards crowdfunding campaigns that have gone viral because the product is cool enough to generate a cascade of social media activity, leading to big money being generated from shares, likes, and re-tweets. Social media will be more effective if your company has a strong “social good” element to it, as these projects are naturally more shareable.
“Because we are in the business of electric vehicles, I believe social media was more effective for us. People don’t boast about the stocks they have invested in - unless it is a company that they really love, like EkoRent. Then people will talk about it to their friends and peers. Being able to say they own part of an electric vehicle company is a cool thing to be able to say.” says EkoRent CEO Juha Suojanen.
Go beyond social media. Meet people in person at investor evenings, use your email list, come up with a great video, and get your personal networks energized too.
3. If you can, find a lead investor
The first lead investor is the one taking the biggest reputational risk, and often contributing the most money. Finding a lead investor is tough, but will drastically improve your chances of success. Once that initial lead investor is on board and has validated the investment proposition, people will have more confidence in you, and you start the campaign with momentum.
“Closing the deals with the lead investors took a month longer than we expected. But we saw it as really crucial,” says Jarno Alastalo of Heimo. Spend the time finding a lead investor, and you will reap the rewards.
4. Offer a reward along with the equity
Just because you are offering equity does not mean you can’t also offer other incentives alongside it. You might get more interest if you also offer your investors a bonus. EkoRent gave all of their investors two free hours of driving time for their electric vehicles, while investors who bought more than 200 shares received five free hours of driving time.
Quite apart from making your offer more attractive, another advantageof offering rewards through your campaign is it can introduce new people to your company. Perhaps the people who used the free hours of EkoRent driving time also told their friends about the experience and became frequent customers themselves.
Isolating what made a campaign a success or a failure is always difficult – more usually, it’s a combination of factors that will contribute to the outcome. Even so, seeing what has worked for others is a great way to form your own crowdfunding action plan, so you can join the ranks of companies who have successfully funded.
If you enjoyed this article, you can read a comprehensive overview of equity crowdfunding by downloading Nathan Rose’s new book, FREE on Amazon for this week only, featuring even more insights from Invesdor and many other platforms from around the world. Click here to get your copy.
Nathan Rose is the founder of Assemble Advisory, an agency for companies wishing to pursue equity crowdfunding campaigns, and the author of the upcoming book: Equity Crowdfunding: The Complete Guide For Startups and Growing Companies.