Ten Best Practices for a Crowdfund Investing Campaign
Following are ten principles you should follow so you do right by your investors and yourself, both during a campaign and after it’s funded:
Set Realistic Expectations
Your investors expect you to set reasonable expectations based on your experience and set milestones to achieving those goals. Take the time to map out a business plan. Break your plan into milestones, and make sure each milestone is achievable based on time and resources.
Work for Your Investors
When you take on investors, you take on a legal responsibility — a fiduciary responsibility — to do right by your investors and act in their best interest. Your investors want to make sure you’re making sound decisions with their money, and they want to hear about what you’re doing.
Don’t Be Evil
Crowdfund investing is a brand-new industry that allows entrepreneurs and small businesses access to capital to start and grow their companies. Many people stand to benefit from this funding source — including the American people, who need the jobs it can help to create — if the industry maintains a great reputation. If it becomes tainted, even by a few individuals’ poor behavior, the industry as a whole will be constrained. Therefore, everyone involved in the industry has the responsibility to make sure things are done right.
Thank Everyone — Constantly
Throughout the process of starting your business and raising money, you’re going to get help from many people. Thank them often, and thank them genuinely. When your campaign is live, be grateful for every investment pledge you receive. Thank people in your online forums, via e-mail updates, and on your Facebook page. When a friend, family member, or another close supporter invests in you, take the time to call and say thanks.
Give Credit Where Credit Is Due
If someone helps you, give him credit in an open format. Your investors don’t expect you to be a one-man show, so share the spotlight. Showing appreciation can get your entire support team to work even harder.
Engage with Investors in Regular and Scalable Ways
The word scalable is very important here. Chances are, you’re already putting in 60 to 80 hours (or more) each week to achieve your business goals. You simply can’t respond to individual e-mails or calls from your investors. If you did, you wouldn’t have any time to run your business.
You must create a communication cadence (a pace and pattern of communication) that works for you, and tell your investors what this cadence will be so they can set their expectations. Then meet those expectations! As long as you communicate regularly and on schedule, most investors will appreciate it and will respect your time.
Create Ways to Include Your Supporters
Your supporters bring wisdom, knowledge, and marketing power to your venture. Take advantage of the fact that you have a group of backers with a vested interest in your success, and figure out ways to include them. Here are a few suggestions:
Create an informal board of advisors, and establish subgroups for sales, marketing, public relations, graphics and design, operations, and finance.
From your board of advisors, pick a few seasoned entrepreneurs — preferably ones who have raised capital before — to be your mentors.
Create an e-mail inbox for questions from investors.
Make Your Vision and Goals Transparent to All
To gain investors, you must clearly communicate your vision and goals. The same is true for growing and leading your team. So, whether you’re talking to your investors or employees, you must communicate your vision and your goals over and over again.
Understand Why These People Are Investing in Your Company
Investors, especially early-stage investors, are supporting you more than they’re supporting the exact details of your plan. When you run into rough times and wonder why you ever decided to start this company, let their faith in you inspire your own confidence.
Work with People You Like
As you’re building your company, nothing is more important than the team you create. No matter what skills people have, if you don’t like them, you shouldn’t work with them.