Now that you know some of the tools to jump start your campaign, the next item on the list is the most important (and reason behind the campaign); getting funding. Knowing each scenario will differ, below we outline the 3 crucial groups you need to focus on to get there; your network, an equity investor and the crowd. This series is focusing specifically on equity crowdfunding, so the value of these groups (and groups themselves) will differ from other types of crowdfunding investors.
Family & Friends
In our last post we talked about how creating momentum is a catalyst for pushing your campaign forward. Your personal network is the group that can help you raise that initial 30% of funding that will show lead investors there is genuine interest in your offering. What is the value of this group?
As you already have an established relationship they will be the most accessible. Setting up a meeting will take less effort than with someone whom you don’t have that connection to.
This process isn’t an easy one. As you encounter roadblocks, this group will be there to give you that boost when you need it. Even if it is a small one, this can be enough to keep you from throwing in the towel.
Not as in a brand advocate (although surely that will ring true). Rather, as in no matter the outcome they will still support you. Just make sure you don’t accept any money from Uncle Gary, the grudge holder.
Remember, these are the people whose lawns you mowed and babies you watched. These relationships go deeper than traditional investor relationships. Be ready for unsolicited advice and potentially awkward family reunions. After all, this round of funding can help turn weary investors to confident investors.
Lead Equity Investor
“Your lead investor will start the movement for your company. They will become your social proof from other investors,” says Adeo Ressi, CEO of the Founder Institute.
After your family and friends are on board, you need to secure a lead equity investor. The first step is to lay out your expectations of your investor. Think of it as interviewing what will essentially be your future “boss.” It is advantageous to establish an honest relationship to avoid a situation that isn’t beneficial to either party. There are several factors you will want to ensure your equity investor has.
The first quality to look for is do they have the funds. This may seem like an obvious one. Just as they are doing their due diligence on you it is equally as important for you do your due diligence. Make sure they are reliable and have a clean track record.
What else can they bring to the table? In addition to adding monetary value, aim to seek an equity investor that can add social value as well. Having a partner with a large network or access to an influenceable audience will propel your brand further, faster (and probably cheaper too!)
Finally, one last important quality to look for, as obvious as it sounds, is industry expertise. As stated earlier, this investor will be making the big decisions with you. Having an investor that can increase your knowledge base as well is more valuable than just someone giving you money.
Don’t shy away from asking questions during this process. This investor will not be a silent partner so make sure all expectations match.
One additional piece of advice: Avoid equity investors who have similar concepts already in their portfolio. Doing so will limit the ability of poaching due to sharing trade secrets with the investor.
The final group of investors you need to consider is the crowd. While they will not be providing the same value as a lead investor, their support is still crucial.
These are your army of supports, they are your storytellers. They are making your story their story and telling their network. They are providing the most honest form of marketing, word of mouth.
Your Test Group
As the first public unveiling of your venture, this group will show you how the public responds to your idea. In doing so, you will get valuable feedback and perspective that you have never considered. Their reaction will help shape your future decisions.
You are speaking to your vulnerabilities by proactively answering any doubt raised around your product while they are creating hype. They are sharing your ups and your downs. Just as they influence future decisions, these decisions should be made with them in mind to avoid losing support.
Knowing your audience is one thing, but speaking to them is a whole different ball game. For the past 10 years we have thrived on crafting tailored messages that result in client wins. Contact us today for more information!