Synopsis: An equity crowdfunding agency can help startups by showing them how to optimally execute their campaign. This article shows you how to identify the areas that you might need help in, and decide whether engaging the services of a crowdfunding agency makes sense.
Should You Use A Crowdfunding Agency?
One of the things you will always hear crowdfunders say is that they underestimated how much time and expertise were needed to launch their offer. Without exception. No matter how much work they thought it would be, it ended up being more.
It’s natural to look for help when feeling overwhelmed and / or out of your depth.
The common wisdom in business is to concentrate on the things you are best at, and outsource the rest to professionals. If you need a logo designed, and you are not a designer, you would get help. The same when it comes to having surgery – you put yourself in the hands of a trained medical practitioner. Successful people understand what they are best at, and get highquality advice on board as and when they need it.
You know your business better than anyone – that’s a given. You might even be able to get your head around how does equity crowdfunding work. But can you explain it to the investing public better than anyone? Do you know which parts of your crowdfunding promotion are holding you back? Can you navigate the different crowdfunding platform options?
Equity crowdfunding agencies come in a variety of shapes and sizes. They can be from a variety of backgrounds including finance, marketing, and public relations. There are also large agencies which offer an entire suite of services under one roof.
Whether or not to use an agency depends on what skills you have within your team, how much time your team can afford to devote to pulling it all together, and what your budget is.
What Can An Equity Crowdfunding Agency Do?
An equity crowdfunding agency will have seen many successful (and unsuccessful) campaigns up close, so they know what to do and what not to do. They can guide you so you don’t make the same mistakes others have. They can make your campaign better, and give you a better chance of success.
A crowdfunding agency can also function as a motivational force once you go live. Almost every campaign experiences a bump or setback and an agency can help you get through this. Crowdfunding remains an unpredictable business; you never really know how the public will react, but an experienced crowdfunding consultant will have seen it all before.
Hiring an agency can also save time. You won’t have to spend as much time learning how to crowdfund, and they can make sure your efforts are being spent the right way. With an experienced crowdfunding agency as your co-pilot, important strategic choices can be made faster. This can save you a lot of effort.
“Our view is external campaign agencies are crucial to the process as it enables the entrepreneur to work with an expert to empower and inspire them to build out their network” – Chris Thomas of Eureeca.
What About The Costs?
There is a price tag attached to using an equity crowdfunding agency. Be clear on what it will cost you and whether this fits into your budget.
The two fundamentally scarce resources for a startup are time and money. Which of the two are you poorest in? If you’re poorer in time than in money, then a crowdfunding agency makes a great deal of sense.
You have a choice to make. Either you need to trust in their ability to help you get you the result (look at their credibility indicators to help make this judgement call), or you will need to learn how to do things yourself.
Consider the risk-reward profile: what the consultant costs, versus how much money you are trying to raise. You don’t want to pay a fee which is too large in comparison to your funding goal. If your raise is small, then the fee of a one-on-one equity crowdfunding consultant could represent an overly large proportion of it. In this case, group learning such as workshops and online courses might be a better fit for your budget. If you are raising larger amounts, then the cost of an agency becomes smaller as a percentage of the total raised, and therefore makes more sense.
Many cash-strapped company founders want to know: will consultants work on the basis of a success fee? Generally the answer is “no.” Some will work on retainer plus success fee, while others will ask for straight retainer.
There are just too many factors at play that determine an equity crowdfunding campaign’s success and, while a good crowdfunding agency can help, they cannot control all of them. The quality of the company itself matters a great deal, the founder’s willingness to work at their offer is vital.
“Try as one may, it’s not possible for even the most successful of crowdfunding agencies to predict the success of a campaign” – crowdexpert.com
To see whether an agency will be a good fit for your campaign, ask the agency to tell you about:
- What their skillset is, and does this match with the needs you’ve identified?
- How credible are they?
- Why do they say their past campaigns succeeded or failed?
The decision of whether to use an equity crowdfunding agency is a very personal one. Do you back this agency to save you time, and give you a better chance? Or do you prefer to tackle the project yourself, learning as you go?
Whether you decide to bring a crowdfunding agency on board or not, remember that you still need to take charge and commit time to your crowdfunding campaign – the agency will help show you where your time is best spent, but it is not possible to get an agency to do your campaign “for you.” It needs to be you fronting the video and speaking to investors. You can never outsource all the work.