A successful crowdfunding round takes work and commitment before starting the round, during the round and also afterwards. Based on our experience, we’ve highlighted below a few steps you can take to increase your campaign chances of success.
Get your priorities right
Managing your fundraising round should be one of the priorities of the company, not just something to do on the side. A key senior person should be dedicated and assigned to be responsible for the fundraising. Remember, a crowdfunding round is also a marketing campaign for your company and its products & services.
Activate your community
You should be able to identify and engage with your own community and others in your industry (ie. customers, partners, suppliers, etc). It would be a challenge to mobilise retail investors otherwise.
Aside from that, you should build your network through offline engagement and via digital/social media. If you are not active on social media, we recommend that you immediately start building your social media presence and get followers on the channels you deem to be relevant to your business.
Showcase your achievements
ECF works for all kinds of companies and industries. We do note that the stage of the company does matter. For example, companies that are still in ideation stage generally do not do well in ECF. This is not to say there hasn’t been amazing success stories, there are, but we believe that these are just outliers. We recommend you have some sort of traction before you consider raising funds via ECF. Traction could mean a million different things depending on your business model and the industry you operate in. Generally, traction could mean, signed up merchants, a tested prototype or even a mailing list or a large social media following.
Put a price tag on it
Valuing your startup is never a straightforward task, especially for companies with little or no revenue. Ultimately, investors want to see a valuation that you can defensibly back with a valid valuation method. Click here for a list of valuation methods.
What is the exit plan?
“What is the exit strategy?” is the question we see asked the most by investors to companies raising funds on our platform. This obviously for good reason. Investors want to know what is their potential return and when should they realise their investment. Ensure you highlight potential exit strategies, timeline and justification.
Have something indicated
Launching your crowdfunding campaign with indicative funds commitment (~20% of your target amount) helps greatly in the success of your crowdfunding exercise as it reduces the perceived risk of investing in the crowdfunding exercise.
Engage with your investors
Traditionally ECF campaigns are set for 60 to 90 days (it may take more or less time than this). In that time, your business will progress, numbers will change; you will acquire a new client for example or you will start testing your new app. Keep your investors and anyone who might be listening up-to-date with your business progress.
Once you raise the funds and close the campaign, keep your investors informed of the company’s progress. This helps transform your investors into brand evangelists and you’ll have a crowd that is happy to invest in your company again should you try to raise funds again. We recommend to provide them with brief quarterly reports. Our platform streamlines this process using our Investor Dashboard and templates.