Crowdfund Investing For Dummies
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Business customers and crowdfund investors can now visit an online review site and write anything they want about their customer experience, your product, or your service. Bad publicity used to mean photos of you in handcuffs on the front page of a newspaper. That still qualifies as very bad publicity, but many other (more subtle) forms of bad publicity exist today.

You can survive a small percentage of negative ratings (because the positives outweigh them), but if you begin to trend in the wrong direction, you can find yourself with a crisis on your hands — especially if your investors join the negative chorus.

The only thing more damaging to your company than an unhappy customer is an unhappy investor. An unhappy customer may cost you some sales, and that’s pretty bad. An unhappy investor who has legitimate grounds to be unhappy may shake the confidence of your entire crowd, and that’s potentially catastrophic.

How do you ensure that an unhappy investor doesn’t take to the web and throw you to the wolves? There are two broad possibilities:

  • You have a legal problem. If your investor is responding to the fact that you’ve actually broken the law, you must seek legal counsel.

  • You have a communication crisis. This possibility is more likely, and it can occur because you’ve made a mistake or — very often — through no wrongdoing on your part.

Let naysayers speak (or type) their minds

Your first step is to remind yourself that anyone can send an e-mail, respond to a blog post, or post on a site like Facebook, LinkedIn, or Twitter. You can’t stop them, so don’t spend any energy trying. Accept the fact that some people thrive on stirring things up, and they may even be trying to engage you in a public (online) confrontation. Don’t take the bait.

Don't ignore what’s happening. (That would be inaction, which is very bad.) If your investors begin to go negative in the discussion forums on your online funding portal, in e-mail threads, or on their social media sites, you must take their complaints seriously.

Just don’t let your fingers start typing responses before you’ve had a chance to step back and think through an appropriate communications strategy. If you hit Send when you’re seething with anger over someone’s false statements, you’ll likely regret it later.

Respond with the facts

If you’re operating in a transparent manner, you always have the facts on your side. Make sure that you track your own investor communications because they can support you in times of crisis. Keep a record of all your investor updates, your online discussion forum posts, and your blog/Facebook/LinkedIn/Twitter posts.

That way, if someone misunderstands or misinterprets what you wrote, you can reread your comments and clarify what you meant.

When a customer or investor makes a false statement online, take your time and respond with facts you can support. You don’t want too much time to pass before responding, but you should give yourself a chance to feel certain about what you’re saying.

And if you can ask one or more of your supporters to read what you’ve written before you post or send it, even better; they can help ensure that you’re writing in a calm, professional way that will soothe fears — not add fuel to the debate.

If you always rely on facts, you never have to remember two or three versions of the “truth.” You also save a lot of time and mental strain. Make it your policy always to tell the truth about your business — always. That way, you’ll never lose your investors’ trust.

Involve your crowd proactively

The best defense is a good offense. You’ll already be proactively and voluntarily interacting with your investors via consistent communication. Doing so helps you build strong social capital with them; your investors will feel like they’re on your side and will defend you from outside attackers.

If, on the other hand, you fail to keep your investors apprised of what’s going on at your company — if you fail to communicate regularly with them and overlook the need for transparency — they may be shocked when they read something negative about you or your company online.

They won’t automatically jump to your defense because your silence may suddenly feel very suspicious. And if your own investors don’t come to your defense, you may end up with a PR snowball that knocks you flat.

Your investors will be your best advocates if you involve them proactively. Don’t underestimate the value of consistent, honest communication.

Remain honest

Think of a recent scandal involving a public figure. (Politicians and sports stars make sure we always have a crop of such stories to consider.) What made that story so juicy? Why did the public eat it up?

Chances are that the facts of the story were only one part of its appeal. In most cases, the attempted cover-up is equally fascinating and keeps the story in the news cycle for weeks instead of days.

Hopefully, you'll never have to manage a celebrity- or politician-sized PR scandal, but you can learn from their mistakes nonetheless. The most important lesson to take home is this: Be honest! If you make a mistake, admit it. If your investors are justifiably upset with you, acknowledge what really happened and offer assurance that you won’t repeat the behavior. If you try to cover up the truth, you’ll only prolong the pain.

About This Article

This article is from the book:

About the book authors:

Sherwood Neiss, Jason W. Best, and Zak Cassady-Dorion are the founders of Startup Exemption (developers of the crowdfund investing framework used in the 2012 JOBS Act). They deeply understand the process, rules, disclosures, and risks of capital formation from both the entrepreneur's and the investor's points of view.

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