5 keys to raising millions with equity crowdfunding
Apr 11, 2024One way to raise capital for early-stage startups is equity crowdfunding. This is a method of raising capital from a broad range and number of investors, usually in smaller checks. It can mean raising from accredited investors, but there is also the option of raising money from unaccredited investors (also known as retail investors).
Raising via equity crowdfunding isn’t for every startup. It involves a lot of effort, planning, and strategic marketing. However, is executed professionally, equity crowdfunding campaigns can bring in millions of dollars of investments, usually at relatively favorable terms for the startup.
Jason Fishman is the CEO of DNA, an agency that helped startups raise more than a billion dollars via equity crowdfunding. He joined us at the Meet.Capital Startup Podcast, where he shared some stats, showing that startups can raise millions of dollars marketing their offering on social media and elsewhere, but there is also a high failure rate.
He also gave us his five tips for getting it right. The first two relate to the decision of whether or not to raise from the crowd, and the last three are about managing and operating a campaign successfully:
1. Start with guidance
Engage with consultants, coaches, and advisors who specialize in crowdfunding to help with the setup process, assess readiness, and choose the right crowdfunding portal based on success rates, live campaigns, and funding achievements.
2. Raise at least $100k for the round, ahead of time:
Don't launch a crowdfunding campaign unless you're confident you can secure at least $100,000 from your existing network. This initial amount will kickstart your campaign and provide the social proof needed to attract further investment.
3. Rally support on various groups and social media platforms
Before and during the campaign, strategically engage customers, clients, anchor investors, strategic partners, and anyone with a sizable and engaged audience. The goal is to create a buzz around your campaign, ideally getting different groups to promote your company on various days to maximize exposure and interest.
4. Have a detailed marketing strategy
Many campaigns fail because they lack a clear plan for achieving milestones. Create a content calendar with headline-worthy announcements and follow a structured strategy to guide your campaign.
5. Keep optimizing
Regularly analyze campaign data to optimize your approach. Be prepared to make adjustments as needed and don't give up, regardless of the challenges.
Most startups will need the help of an experienced agency or expert to help them manage their equity crowdfunding campaign successfully, including setting the right budget and schedule. Done professionally, the results can be a great way to raise capital while growing awareness for your company and brand.
