Crowdfund investing occurs online, via SEC-regulated and FINRA-registered crowdfund investing platforms. The online solicitation of potential crowdfund investors takes place primarily via social media to individuals who are known by the issuer. Although some crowdfund investors put money into people or companies they don’t know well, most money that’s raised from crowdfund investment comes from individuals the issuer (the entrepreneur or business owner) is already connected with.
Imagine you own a white-water rafting business and you’re seeking to raise $100,000 to expand your operations by purchasing an additional boat. You’ve owned the business for five years, and you’ve been successful at growing the business by an average of 15 percent per year.
You’re active in your community; prior to owning your own business you had experience in outdoor tourism, and you’re vice president of your local chamber of commerce. You sound like a great candidate for seeking investment from people who know you, right?
Now imagine that you’re terrified of social media and haven’t even set up a Facebook account yet. What do you do? How can you communicate your skills, accomplishments, and previous results to potential crowdfund investors?
Here’s the short answer: Get over your fears and get online. Crowdfund investment takes place online, and that’s not going to change. Either you change, or you can’t take advantage of the opportunities afforded by the JOBS Act.
The CEO and/or management team of a company seeking crowdfund investment must have at least one social media profile. Without this minimum level of online connectivity, the investment campaign can’t launch. (Likewise, a potential investor can’t tap into crowdfund investing without a social media presence. You can’t mail a check to get in on this type of investment.)
Online funding platforms must enable effortless connectivity between their services and all leading social media platforms so that both issuers and potential investors can link their social media profiles on each platform.