Equity crowdfunding is becoming one of the most popular options for business fundraising, but how can you make sure your campaign hits its target?
To answer this question, our Investment Conference crowdfunding panel asked for tips from some of the top experts in UK equity crowdfunding: Oliver Woolley of Envestors, Goncalo de Vasconcelos of SyndicateRoom, Saul Gindill of Seedrs, and Lex Deak of OFF3R.
Choose your platform based on your business.
The panel agreed that crowdfunding platforms collaborate more than they compete because different platforms serve different types of entrepreneurs. So don’t apply to the platform you happen to know about. Shop around and judge which platform seems most hospitable to businesses like yours.
Talk about your team.
Your product or service is important, but what investors really want to know about is your people, particularly the founders. In your campaign, demonstrate not only your knowledge as an industry expert but also your chutzpah as an entrepreneur who can face any challenge.
Convey originality and substance.
Equity crowdfunding investors are tired of seeing “me too” businesses that copy successful predecessors (“We’ve created the next Skype!”) and flimsy technology with nothing to offer beyond the basics. Demonstrate in your pitch that your business belongs to neither of these categories, and you’re more likely to keep an investor’s attention.
With that said, your originality and expertise will be lost on investors if you use too much jargon or make too many assumptions about their knowledge of your sector. Explain your idea as concisely and accessibly as possible.
Be fair in your valuation.
Even the people operating crowdfunding platforms struggle to verify a business’s valuation, so accept that this will be tricky. The best approach is to settle on a number that feels ‘fair,’ not the highest one possible. Valuate too highly at your own peril—if you fail to live up to this valuation, your investors will probably walk away. To test your valuation, the panel advised, run it by a few people in your inner circle first. If they balk at the number, investors will, too.
Know that your predictions are probably wrong.
Some platforms do not ask for your projections of your business’s future valuation and only give this information to investors who request it. This is because these predictions are usually inaccurate and therefore cannot stand as an important feature of your campaign.
Present yourself and your business plan as approachable, fresh and fair, and you’ll be well on your way to crowdfunding success.
Looking for more tips to get investment-ready? Come to our 28th November workshop, ‘Getting Investment-Ready: Strategy and Valuation.’ The event will be held at London’s WeWork Moorgate and begin at 6:00 p.m. Get your tickets here!