Tips for an Effective Crowdfunding Campaign - dummies

Tips for an Effective Crowdfunding Campaign

By Helene Panzarino

For many businesses, crowdfunding can be an extremely effective method for raising funds and expanding your customer database, as it acts like a marketing tool as well. What you may not realise is that there’s more to a crowdfunding campaign than just putting a video up on a website.

You need to prepare your proposition well, use words as well as images and be very active in spreading the word about what and how much you are doing and raising.

Some useful tips follow:

  • Thoroughly prepare your content. Preparation is key to a successful campaign, and you need to allow ample time to get your documentation, video pitch and marketing campaign right. It should be a team effort, spreading the workload and making sure there are no gaps.

    Creating a compelling story is vital when engaging your network of advocates and future investors. Work with your advisors or chosen platform team to build a detailed and well-structured Investment Memorandum and make sure you have all the required documents to present your business as a vetted investment opportunity to all types of investors.

    When you upload your information to the fundraising platform, it’s important to remember to tell your potential investors

    • What your product or service is.

    • What sets you apart from your competition.

    • How your business generates revenue.

    • Why they should invest in you.

    • What’s your investment offer.

    • What’s your exit strategy.

    Put the same information on your own website, and link it to the crowdfunding profile.

  • Record your pitch video. Your funding video is a powerful way to tell your story and plays a particularly important role in getting potential investors interested in your business. Make your video short, clear, authentic, and be sure to include a call to action. The optimal length for your pitch videos is 2-1/2 minutes.

    You don’t want to sound stilted or rehearsed, but you need to have some sort of script to keep you focused and within a good time limit. Some of the things you might want to include are:

    • Introduce yourself.

    • Explain your product or service.

    • Describe what’s unique about your business; what makes you stand out.

      Make your pitch jargon free, use humour carefully and sparingly, and let your true self shine through.

    • Talk about your business model and how you generate revenue.

    • Share any achievements to date.

    • Tell the audience what your business is valued at.

    • State how much you’re looking to raise.

    • Explain what’s the money will be used for.

    • Tell the audience what you and the team bring to the business – why you’re amazing.

    • Give viewers a reason to invest. Describe the potential reward in return for the risk investors take.

    Make sure that your video is playable in high definition on YouTube and that it looks as professional as your budget will allow. The resolution and file size of images should be as big as possible and in landscape mode (at least 850 by 480 in JPEG or PNG). Individual images of team members should be in portrait mode.

  • Share your pitch deck. A good pitch deck is creative and clear. Try to limit it to ten slides for a crowdfunding site. Stick to graphics, tables and images, and avoid heaps of text. The following suggested outline is a more detailed version of questions you’ve already addressed in your funding video and will help you to create a convincing pitch:

    • Short description: Describe your company in one inspiring sentence.

    • Product and benefits: Describe your product/service and explain the customer benefits.

    • Your market: Describe your target customers, the market potential, your competitors and your unique selling point (USP).

    • Business model: Explain how the business makes money and how scalable the model is.

    • Traction: Explain your commercial activity to date. What do sales look like? What stage are you at with your product or service? What are your goals for the future?

    • The team: Introduce your team and include photos. Also list your key advisers, partners and mentors.

    • Funding: Share what your business valued at. State how much you’re looking to raise and what is the capital for. If the business SEIS/EIS approved, share that?

    • Contact information: Tell potential investors how to find you! Provide contact details, and some key company facts like the date of incorporation and your company registration number, if you have one.

    • call to action: Tell viewers what you want them to do now they’ve seen the video.

  • Include an interview. It’s important for investors to get to know you so they have an understanding not only of the business, but of the minds behind it. You can upload an informal a ‘question and answer’ session in that you can also use on blogs and other social media.

  • Share testimonials. A quote from a happy customer, existing investor, advisor or awarding bodies/judges is a powerful way to bring your business appeal to life. Collect your testimonials in written and video forms, if possible, to maximise their use in all your communication.

  • Set up your funding communication strategy or marketing plan. An already-established community, whether personal or business, is incredibly helpful and can assist you in sharing your message, as well as investing themselves. Aside from the community, spend time researching where else you can spread your message. Some actions that could work well:

    • Direct marketing: Create a mailing list with everyone who might be interested in supporting you. You want to use this list for two things: raising capital and expanding your network.

    • Email marketing: If you have a mailing list with potential investors on it, them an email to introduce your business and make them aware of your fundraise on your chosen platform. To be as effective as possible, try to network to obtain the business emails of people who might be serious prospects and to follow up with calls, aiming to set up a meeting for a final discussion.

    If you have your own public relations (PR) representation or press contacts, use them to communicate your crowdfunding campaign. Also take advantage of any PR opportunities and additional support offered by your chosen platform.

  • Expand your network. Many people will like your business idea, but for various reasons only few will actually invest. However, you can still benefit from their networks. Ask investors you are talking to if they know two or three other potential investors who might be interested in your business.

  • Attend and host events. Attending and hosting events are great ways to put you in direct contact with potential sophisticated investors, and enable you to practise your pitch. Attend as many suitable events as you can in your area, and further afield, and if possible, create some of your own events, as well as attend any of the investor facing events organised by your platform.

  • Make use of social media. Use your Facebook and Twitter accounts to transform your supporters into investors by making them aware of your fundraise and updating them regularly. Remember, every post should include an appealing picture. Encourage friends to share your posts and tweets with their network, and work that hashtag. Share your social media handles with your platform, so they can mention them too.

    Make your LinkedIn network aware of your campaign, too. Also consider contacting LinkedIn groups to spread the word. With most groups having over 1,000 members and the majority of them getting a group update email this method can get you into thousands of inboxes around the world.

  • Tap into a network of influential people. This can work incredibly well to create momentum for your campaign. Think of the most influential people you know or know of in your industry, and use social media to raise awareness of your campaign with them. Hopefully, they like what they see and will mention it, or who knows, they might even invest.

  • Blog about your fundraise. Post informative updates about your business’s developments so you can stay in touch with your crowd throughout the funding campaign. Include things like funding progress, hitting business milestones, taking on new partners, securing a new contract and so on. Use all social media outlets to drive traffic to your blog or any other on line interaction you’ve set up.