Adding Value to a Company as a Crowdfund Investor
Part of the Crowdfund Investing For Dummies Cheat Sheet
As a crowdfund investor, you may have opportunities to help the company beyond providing your financial capital. Not every company that you invest in will make such requests; let the business owner drive these decisions, and don't be offended if you aren't asked to participate. If you do get a chance to add value to the company, you have to strike the right balance with your participation. Here's how:
Share what (and who) you know. Providing knowledge and introductions can be very helpful if done in the right way and when the entrepreneur asks.
Tap into your professional experience. Do any of your professional experiences relate to the crowdfund investment you've made? How can you structure this information and deliver it in a way that's helpful and not distracting to the entrepreneur?
Connect people who can benefit each other. The most powerful connections are two-way streets: They engage both parties in delivering value and receiving value. When you become a crowdfund investor, try to identify relationships for the entrepreneurs or small business owners that can have bi-directional benefits.
Serve on a board of advisors. On occasion, you may be asked to serve on a board of advisors for a new enterprise. This entity is different from a board of directors, which must represent the rights and interests of the stockholders and can take actions on their behalf as prescribed by the bylaws of the company. A board of advisors has no formal authority over the company or the CEO. Its function is to provide advice, know-how, connections, and (in some cases) additional financial support to the business owner. An advisory position is typically unpaid but is also very important to a new or small business.
Essentially, as an advisor you agree to be a mentor to the entrepreneur or business owner. You bring experience and a fresh perspective to whatever issues this person is dealing with. Your primary job is to offer honest, direct opinions in a respectful way.
Offer constructive criticism of the product or service early in the process. If you're investing in a startup or in a company that's aiming to grow by adding new products or services to its lineup, you may be asked to sample the products or services and offer your opinions about them. This step takes place shortly after the business owner has moved from planning to execution and — ideally — quite a while before the product or service is scheduled to be available to the public. Consider what type of feedback would be most useful to the business owner, as well as how to present it in a helpful (not hurtful) manner.
Become an ambassador for the company. The foundation of crowdfund investing is putting your money into someone you know and believe in — and something you would buy and use and be proud to discuss with everyone around you. When you become a member of a company's investment crowd, you also become a marketing engine for that business. You can do so by asking the entrepreneur how she specifically needs help getting the message out, or you can make marketing this company your own personal mission.