Synopsis: Equity crowdfunding promotion can take many different forms. This article explains 10 separate tactics that you can use to promote your offer, including the sorts of companies that each will work the best for. After reading, you will have a priority list of the marketing strategies that will work best for your campaign.
10 Tactics To Get Attention And Money
Once you understand the crowdfunding pros and cons and how does equity crowdfunding work, the next step is to what it actually takes to drive people to your offer page and invest. That is exactly what this article on crowdfunding promotion will help you with.
Different crowdfunding promotion techniques will work best for different campaigns. But it is far better to use as many different tactics as possible. Don’t let yourself utter the words ‘if only I had tried this, then maybe the offer would have succeeded.’
Tactic #1: Friends And Family
“Who wants to ask their friends for money? It is not an easy thing to do,” muses Tom Hodgkinson of Idler Academy. Nonetheless, they are a source of capital that you can try to get on board before launching your other crowdfunding promotion efforts.
“Using your own network is essential, but I found it difficult from a personal point of view,” says Thomas Adner of Caliente. “Of course you want to tell them you are doing crowdfunding, but you don’t want people to think you are begging them for money.”
The best balance is to make them aware of your campaign, but do not make them feel pressured to contribute just because they are your family and friends. A nice compromise could be to ask your friends and family to invest a modest amount, i.e., the amount they might otherwise spend on a birthday gift. This will allow you to start your external crowdfunding promotion activities with at least some money in the kitty, and it will bring your friends and family along for the ride.
Tactic #2: Email List
It will be far more effective, and far less costly, to reach your existing email list than anyone else.
The tone of your messages is important. You could send a message with a link to the offer page and ask them to invest. However, this is a rather blunt way of crowdfunding promotion – just think of your first reaction when somebody asks you for money on the street. Most people instinctively recoil when asked for money outright.
The emails you send can be prepared and scheduled ahead of time. Doing so is best practice, as it means your emails will build on each other in a well-thought-out manner, rather than just sending whichever emails feel good at the time on an ad-hoc basis.
The post-launch emails should share positive news about your company which was not included in your original pitch, giving you content that justifies you sending these emails – when you send emails you ought to have something to say beyond “Our offer is still open!”
Tactic #3: Pre-Registration Period
It’s a good idea to run a pre-registration period before an offer officially opens and your crowdfunding promotion kicks off in earnest.
Prior to Monzo launching, they played up to the fact that they expected the offer to close very quickly. This wasn’t an empty boast – Monzo had 75,000 people on their waiting list, and they had secured significant venture capital backing. To give themselves more of a chance, people could sign up for priority access through a pre-registration period. Not only did this build a tide of momentum in their crowdfunding offer, but it drove additional users and customer sign-ups thanks to the buzz generated.
Once people signed up to priority access, Monzo gave the date the offer was going to open and, crucially, also the time of day. By providing the time of day of the offer opening, people were given the message that if they wanted shares, then they had better be in front of their screens at the moment the offer launched, or they would almost certainly miss out. This generated the sort of hysteria of tickets going on sale for an exclusive rock concert. People were literally counting down to the Monzo launch.
Monzo went on to finish their £1 million offer in just 96 seconds.
Tactic #4: Rewards
Just because you are offering equity does not mean you can’t also offer other incentives alongside it.
You might get more interest if you also offer your investors the sweetener of a bonus. EkoRent gave all of their investors two free hours of driving time for their electric vehicles, while investors who bought more than 200 shares received five free hours of driving time. The great part about providing rewards in your campaign is that it can introduce new people to your company. Perhaps the people who used the free hours of EkoRent driving time also told their friends about the experience and became frequent customers themselves. Very smart crowdfunding promotion.
This should go without saying, but make sure you budget the costs of the rewards into the amount you are raising – if you need US$500,000 for business development, and the rewards are going to cost US$20,000, then you really need to raise US$520,000, after fees.
Tactic #5: Better Terms For The First Investors
If you have not been able to convince people that your offer is going to be like Monzo and disappear in a matter of seconds, then you need to find another way to convince people to back you earlier. A UK study by Saul Estrin and Susanna Khavul estimated that every £1 of investment begets a further 76 pence of investment, from signaling to other investors. Therefore, so much depends on early investors. They signal to others that your offer is worth looking at – therefore, the earlier they commit, the more beneficial it is for your offer.
Most offers give investors absolutely no reason to commit earlier than the last possible moment. In fact, there is even a negative incentive for investing early. If an investor subscribes early they lose the option to change their mind if something better comes along. Also, some payment systems used by platforms take the money out of the investor’s account at the time they invest, rather than at the end of the offer, meaning they forego interest their bank would otherwise be giving them on their savings.
Take a lesson from conferences, who offer special “early bird” rates to encourage people to sign up as early as possible. Perhaps you offer one tier of reward to people who back you on the first day, a slightly lower tier for people who back you in the first week, and a third tier beyond that for everybody else.
Another recent innovation is an outright discount on the share price for early investors. Not all platforms are currently offering this, but a recent offer on Eureeca offered four tranches of shares: the earliest investors would get a 15% discount on their shares, followed by a 10% discount, followed by 5%, and the final tranche would have no discount. This means early investors would get more shares for the same amount of money than late investors. While this novel structure certainly encourages early investors, this needs to be weighed against discouraging late investors who feel like they have missed out on the best valuation.
Tactic #6: Video
Most platforms will now insist that your campaign page feature a 2- to 4-minute video. And even if the platform doesn’t consider it compulsory, it is still generally a strong aid for crowdfunding promotion.
Most people prefer to watch things rather than read them; therefore, your video is the first thing most people will watch. You need to capture their attention within a few seconds so that they will be interested in investing the further time to read about the rest of your offer and do not click away from your page, never to return. If the video is too short, too long, unprofessionally done, or leaves viewers feeling bored or confused, they will bounce from your offer page almost immediately.
Look at videos from past equity crowdfunding offers, and try and jot down the common factors about what made them stand out.
“We studied several pitches in both Europe and the United States,” says Alicja Chlebna of Naturalbox. “We analyzed different pitches and also decided early on what is most important for us to communicate. Our plan was to be authentic, honest, and explain what we do in a short, simple way. I think it is very important to show who you really are, show your personality and the spirit of your company.”
A professional videographer should be used if you have the budget for it. You should come up with a storyboard and a script for the video. Start the video with an emotional “hook”: a statement of the problem that your company solves, and how your company does it. Above all, make it easy to understand! The later parts of the video can go more into details, but make sure people understand the fundamentals of what your business does and how it makes money, in 30 seconds or less. Most importantly, you – the founder – need to appear in the video, to build trust and show the passion that you have for your business. Investors want to back people, not just companies.
Finally, if you insert a musical backing or any images into the video, make sure that you have the rights to use these, so that you don’t fall foul of any copyright or fair usage restrictions.
Tactic #7: Media
Lacking a large existing crowd, some campaigns have tried to make up for it by throwing money at expensive public relations agencies, to get their offer “out there” to as many people as possible. The campaigns I spoke to were unanimous —media exposure is a fine thing, but isn’t worth the expense of hiring a PR firm.
A simple press release just stating you are doing a crowdfunding raise isn’t going to get any cut-through. “Everyone by now has heard of crowdfunding,” says Charlie Thuillier, Founder of Oppo Ice Cream. “To get journalists interested, you need to find your own unique take on it. Create the story. Ask yourself why should readers care about yours?”
Pavegen generates electric power from the kinetic energy of peoples’ footsteps – truly groundbreaking technology. Laurence Cook of Pavegen explains, “We are doing something no one else has done. We have a vision to change the way cities operate in a way no other company does. We can really lay claim to be trying to change the world. So we have an incredibly compelling story.” “At the time of our raise, we created a significant ‘media moment’ around it, which drove hundreds of thousands of people to our site. It was key for why we were able to finish our raise in just three days.” Pavegen did all this without spending anything on public relations.
It is better to be featured for genuine “interest” reasons, by smaller, more targeted publications. Getting your offer featured in the press will be a matter of figuring out an angle that you can go to journalists with, that achieves both your crowdfunding promotion goals, and makes the journalist look good too.
Media can extend beyond the mainstream press. Look to more specialized audiences as well, such as podcasts, bloggers, and webinars. The closer the match their audience is with the sort of person likely to be most interested in your company, the better.
Tactic #8: In-Person Meetings
Just because equity crowdfunding is done over the internet doesn’t mean you should try to conduct the whole crowdfunding promotion campaign from in front of your computer screen. Larger investors can merit facetime. If you can get one person to contribute $10,000, then it is just as beneficial to your campaign as getting 100 people to contribute $100 each.
“Before our offer, I was flying around to meetings. I even flew down to Dubai,” recalls Thomas Adner of Caliente (a company based in Sweden). “We were out there, presenting our case, so that when the offer went live publicly, there would be a good core of people who had already seen it and had the time to think through it.”
Make sure you are spending time with the right people! One founder I spoke to drove to meet an investor, spent an hour with them one-on-one, provided product samples, and went through the market and the business plan in great depth … and at the end of it all, this investor contributed the princely sum of … £10.
It is difficult to know what people are capable of investing (and it is a bit brusque to ask outright), but if you are employing a one-on-one outreach strategy, put yourself in an environment where wealthier investors hang out. Look for angel investment gettogethers and try to get invited to speak in front of an audience. Even if you go there without a speaking slot, at least you will be among the right crowd.
Tactic #9: Events
Giving people the chance to meet you, look you in the eye, and shake your hand can be key. Meeting someone in person always leads to more trust than a picture of them.
You can organize your own crowdfunding promotion event, but you might have more success from appearing at the ones that the crowdfunding platform holds. There will be more of an audience, and it is less organization on your part. Be opportunistic.
André Moll from MyCouchbox relates how they were able to give their campaign a shot in the arm: “We were at an event where Oliver Samwer, Founder of Rocket Internet gave a speech. They invited some startups on the stage to speak, and by chance, we were one of them. So we got to tell a huge room full of people that we had an offer live right at that very moment, and that we had already raised €100,000 during the last 72 hours.”
Moll continues: “That would have been good publicity by itself, but then we also made the comment that ‘unlike Rocket Internet, MyCouchbox are actually profitable!’. The whole audience roared with laughter … well, all except the people from Rocket Internet – you should have seen the look on their faces. It was a pretty cheeky thing to do, but that use of humor made us memorable, alright.”
Tactic #10: Social Media
Social media is less important in equity crowdfunding promotion than in the world of Kickstarter / Indiegogo. We have all heard of the rewards crowdfunding campaigns that have gone viral because the product is cool enough to generate a cascade of social media activity, leading to big money being generated from shares, likes, and re-tweets.
That ‘viral’ effect doesn’t happen to nearly the same extent in equity crowdfunding. For one thing, people are much less likely to want to share what they are investing in, as for many people, investing is a very private matter. It is also much less likely for people to invest in a company based on a social media share, especially if your campaign has a high minimum investment amount. Just think, would you really invest $1,000 into a company you had never heard of before, just because it appeared in your Facebook feed? Of course not.
Social media will be a more effective crowdfunding promotion channel if your company has a strong “social good” element to it, as these projects are naturally more shareable. One reason that people share things through social media is to elevate their own status in the eyes of their peers, and sharing a campaign which is seen as a good cause is an excellent way to do that.
If you are going to use social media extensively, focus less on the fact you are raising money, and more on the mission you’re trying to accomplish.
“We combined two messages in our campaign – our mission, which is to help people with mental health issues, and our business case as a good investment,” explained CEO Jarno Alastalo. “One in three people suffer from mental health problems, so almost everyone has relatives and friends who are touched by the problem we’re trying to solve. That made our campaign especially shareable.” =
Even so, Heimo were quick to point out that social media was not their only strategy. “We also contacted several potential investors before launch. It was crucial to have some money already, so that when the people were directed to our campaign page through our social media, they wouldn’t be directed to a campaign with nothing yet committed. Investors saw that we had 50% of our target already raised on day one.”
The lesson from Heimo is that social media supports momentum that you have hopefully already built in the pre-launch phase. It is not a tactic to generate momentum in the first place.
Summary Of Equity Crowdfunding Promotion Channels
The electronic channels such as email and social media are more effective if your aim is to raise small amounts from lots of investors; the local businesses with a crowd.
In-person channels like events and meetings will support businesses which can command large amounts from angel investors, the potential big winners.
Let me emphasize again, though, that you should really be trying to do as much as you can to use every crowdfunding promotion tactic at your disposal. Use the tactics in combination with each other, and they will reinforce each other.