Equity crowdfunding is certainly a challenge, but its rewards are long lasting.
They might not be obvious at first, but crowdfunding can have some hidden boons for your business.
Crowdfunding allows startups to achieve the same level of exposure normally seen only by large, established firmed with big budgets. Major crowdfunding platforms have hundreds of thousands of engaged users, so when a campaign is successful, both the awareness of a company and consumer trust in it soars.
Specialist crowdfunding agencies, like TribeFirst, were born out of this realisation, aimed at helping young companies take advantage of the unique benefits crowdfunding offers.
In this article, crowdfunding specialist, John Auckland, explains how you can make the most of crowdfunding by looking beyond the money to find other, hidden areas of value.
1. Forget the crowd, focus on building a tribe
Why do we call our company TribeFirst? We think a ‘tribe’ is a more accurate description of the people who back crowdfunding campaigns. Crowds are flakey, disloyal and unpredictable. As such, they’re incredibly difficult to consistently market to. Tribes are loyal, proactive and passionate, which makes them far easier to engage with and helps in building lasting relationships.
The most effective business leaders I’ve met use their first crowdfunding campaign as a clarion call, bringing their tribe together in one place, and offering them a chance to own a piece of the business and help shape its journey forwards.
Scottish craft beer brewers BrewDog came up with Equity for Punks – a great campaign name which characterised and attracted investors who saw themselves as rebellious renegades ready to shake-up the system.
Equity for Punks helped Brewdog to rally and grow a loyal tribe. They also generously reward their Punks with multiple discounts and, now that the company is valued at over £1bn, they’re attracting investors far beyond the likes of craft beer loyalists.
Challenger bank Monzo raised £1m in just 96 seconds – the fastest equity crowdfunding campaign in history. They did so by calling on their tribe well in advance and emphasising the rare opportunity, which was exclusive to their tribe. Monzo continue to keep their tribe in the fold and engage them regularly.
2. Supercharge your marketing and PR
Crowdfunding is a prime opportunity to launch a national (or international) marketing and PR campaign. What other time in your company’s early life can you pursue a campaign where every penny you spend on marketing is almost guaranteed to generate a clear ROI?
Any exposure you receive results in more cash in the form of new investors, as well as new customers. A well-executed campaign can see fledgling companies featured in national newspapers and gaining prominent TV and radio spots.
Just remember: the fact you’re crowdfunding is not something journalists care about in of itself. Instead, find a newsworthy story that fits with your company’s mission and aim to advise and educate your audience.
We find this one of the most effective ways to create an influx of traffic to your website and crowdfunding campaign. Getting the tone and angle right, as well as the distribution of the article, is no easy feat. Hiring a professional PR agency or freelancer is the best way to ensure success.
Lightvert realised the massive PR opportunity that came with their 2017 Crowdcube raise, which sought to fund their innovative digital out-of-home advertising technology. A big PR push led not only to a feature on page three of The Times and several BBC spots, but also a placement in Asia’s biggest newspaper, the South China Morning Post.
They went on to raise £760,000 on Crowdcube with the lion’s share coming from a VC in Hong Kong, who had spotted their placement in the Morning Post. This VC became a crucial contact to help them break into the Eastern market. Lightvert also received a flurry of enquiries from advertising agencies and industry giants from around the world.
3. Maintaining your Tribe
With a strong tribe at your back, nurture them, don’t ignore them!
Neglecting your tribe after they’ve helped you reach your crowdfunding goal is a huge mistake. Crowdfunders that go silent until they need another cash injection can expect their tribe to disperse. So, show them the attention they deserve with regular behind the scenes updates and news about new developments and opportunities.
Investors have your back, but don’t want to feel that they’re there for financial support alone. No one wants to feel like a cash cow. Treat them well and they’ll be fierce allies throughout your company’s journey.
Your investors are also more likely to be customers. They can be a source of useful, constructive feedback regarding any issues with your products and services, rather than complaining or going elsewhere.
You can also expect investors to introduce you to new opportunities and partnerships along the way. Just make sure you remind them why they supported you in the first place.
Borrow a Boat – the Airbnb of boat rentals set out to fund a marketing budget through a Crowdcube raise in January. They raised just under £470k – 234% of their original £200k target.
Of the 699 new investors we helped them to engage, if just one third use their crowdfunding reward, Borrow a Boat will hit their sales target for this year with these funds alone.
They also have a legion of engaged advocates who they can ask for help and know have their best interests at heart. I know of companies getting new advisors, partnerships and other allies simply by asking their tribe for help.
So, if you’re thinking of crowdfunding, look far beyond the money you could raise. Aim for additional goals such as an array of press placements, new additions to your sales pipeline, fresh partnerships, or even an influx of social media followers.
Set these targets alongside your funding goal to help you achieve extra victories in the unique opportunity that is crowdfunding.
John Auckland is founder of TribeFirst, a global crowdfunding communications agency that has helped raise in excess of £4m for over 20 companies on a wide number of platforms. TribeFirst is the world’s first dedicated marketing communications agency to support equity crowdfunding campaigns and the first in the UK to provide PR and Marketing campaigns on a mainly risk/reward basis.