Synopsis: How long does it take for a startup to run an equity crowdfunding campaign? This article has the answers! Every step of the crowdfunding timeline is explained, step-by-step. Read it NOW to find out how long it’s going to take to execute your equity crowdfunding offer.
A Crowdfunding Timeline – From Pre-Launch, To Close
Each platform has their own internal procedure that you will need to go through before your offer can be launched, but they follow a similar pattern. The below crowdfunding timeline should be used as a guide, so that you know what to plan for.
Application Phase (~2 to 3 Weeks)
In this part of the crowdfunding timeline, you will be in dialogue with the different platforms to ascertain their capabilities, and for them to assess your suitability for funding. You’ll get to meet the platforms, they will explain their process, and you get to ask them any questions before making up your mind.
It is absolutely vital to find the platform that is the best match for you, because they’ll be with you throughout the rest of the process. Look for a platform that shares your values and has a track record of facilitating successful raises like yours.
If both you and the platform are happy to proceed, you will submit your crowdfunding pitch materials for review by their investment committee. Depending on the platform, you may be asked to pay an application fee at this point. There will then be a standard set of background checks that need to be done. These might include checking if the directors have a criminal record, that there’s no concern of fraud, and anti-money laundering procedures.
Assuming there are no problems here, the next phase will be a commercial evaluation of the company’s readiness for funding. The platform’s investment committee will review the commercial opportunity for suitability to their investor database and ask you follow-up questions.
All going well, you will then be issued with an engagement letter, which will contain a number of provisions which you should go through with your lawyer. Once you sign the engagement letter, you are committed to using their platform exclusively.
Preparation Phase (~4 to 6 Weeks – Or More)
This phase includes crafting your information memorandum, getting all statements checked off during due diligence, getting your initial investors pre-committed, and building your crowd.
This is the phase where the timeline is the most uncertain. If your company already has a good company constitution, the business plan is already in good shape, and there is no legal restructuring work to be done, then your offer could be ready to launch in four weeks or so. But if these issues need to be addressed, it could take much longer.
The other main thing that holds many companies back is their own internal capability to give the platform what they ask for in a timely fashion. Prepare yourself for a full email inbox. If you can give the offer your full attention, and address their requests the same day or overnight, then it will make a huge difference to how quickly you can go live. If it takes you several days to respond to each information request, the timeline will quickly blow out.
The preparation phase will also involve you preparing your marketing plan. You will want to get this part right, so that when it comes time to actually launch your campaign you already have a clear idea of how you are going to reach out to your crowd.
Campaign Phase (typically 4 – 6 Weeks)
There is still time before the money actually arrives in your account, unless you do such an incredible job of the marketing that your offer closes in a matter of a few minutes. Don’t laugh – real companies have actually closed their offer this quickly.
You can take as long as you need to launch, but once you have pushed the “go live” button, the clock is ticking. There is still a lot to do – you will need to keep the momentum going by executing on your marketing plans, providing frequent updates, and staying on top of the Q&A forum. But at least now the end is in sight.
A Final Point On Timing
One final point when looking at your crowdfunding timeline – be aware of major holidays such as Easter, the summer break and Christmas / New Years. These times have a major impact on people’s willingness to invest. Most people are going to be too distracted to pay much heed to your offer during their breaks.
The most important times for your offer will be the first week and the last week, as history shows that this is when the bulk of the money will arrive. You definitely want to avoid having these critical periods of your crowdfunding timetable overlap with any major holidays.