As you’re looking to crowdfund the next stage of your business’ growth, you will want to read these top five crowdfunding hacks to help you create a killer investment pitch on Crowdcube.
1. A fair valuation
Valuing your business may seem like a daunting prospect but it’s an important factor for investors when considering an investment, so it’s worth doing the research to ensure your valuation is fair and realistic. If you’ve ever seen Dragons’ Den - you’ll know how much of a hot topic valuation is and is often the sticking point when potential investors decide if they are ‘in or out’.
Start by doing some research. Look at the valuation of your competitors, similar sized businesses and those in relevant sectors, as well as other companies that have successfully raised finance, so you can benchmark your valuation against them. It may help you to look at Crowdcube funded companies that have successfully raised investment from the crowd and what valuation they set their business at. This will give you an indication if you’re ball park figure is way off or about right.
Just make sure you also take into account how much traction your business has had, for example what contracts or customers have been secured, what revenue has been generated to date, and if this in line with other businesses that have raised on Crowdcube.
You can find out more about valuing your business including case studies from SmartPlant and Movem, which both raised on Crowdcube in 2017, here.
2. Your video
With crowdfunding, a video is an opportunity for investors to get to know you and your team, and it’s your chance to communicate your investment proposition in a succinct and compelling manner. This is your time to put forward your personality, passion and vision for the company, as people invest in people - not just an idea.
A compelling video will help bring your business to life and show that you have the skills and drive to execute your business plan. Drop Studio, a crowdfunding video expert share their advice for a successful pitch video:
Keep it gripping - people switch off after 3 minutes?
Whatever you’re trying to sell, you need to demonstrate
Of course, over-promising is unwise
Prove your past successes
Finish with a call to action
You can read the full blog here.
3. Know your audience
It’s important to understand your audience and what information they will want and need to make an informed decision about whether or not to invest in your business.
You need to remember that you’re not promoting your product or service, you’re promoting your business as an investment opportunity and you may need to adapt your message to different contacts.
Now is not the time to be shy, you’ll want to contact and spread the word that you’ll be raising investment through crowdfunding to as many as people as possible. You can do this by utilising your circles. Read how Krisi from Bluebird Tea & Co. did this, here.
4. Your key messages
This leads perfectly to the key messages you’ll need to prepare when promoting your crowdfunding campaign. Just like any other marketing campaign, you’ll need clear and concise messages that are consistently communicated throughout all of the activity related to your crowdfunding raise.
Your key messages are summarised in three brief points, which cover:
The business proposition, aim and why you’re raising finance
Examples of traction such as revenue, partnerships and contract wins
Future potential and market opportunity
When talking to people about your crowdfunding raise, don't assume that they know what your business does or that they know what equity crowdfunding is. Ensuring these points are clearly explained in any communication about your raise is key.
For example, when communicating to close friends and family, customers and employees you’ll assume they know what your product or service is, but they may not know the details of your business, future plans and why they should invest.
Your business contacts, angels/high net worths and venture capitalists (which you’ll seek large cheques from), probably won’t know anything about you, your business or products. They will want to see your business plan, market opportunity and understand how you plan to generate high returns for them before they even consider parting with their cash.
5. Secure lead investment
Getting your crowdfunding campaign off to a good start is vital to its success; so it’s important to engage your own network early on to ensure you build momentum right from the start of your campaign. We expect you to raise at least 20% of your target before going live to the wider crowd.
Shareholders have a vested interest in seeing your business succeed, so inviting your existing network to invest is a great opportunity to increase engagement, loyalty and advocacy amongst your own crowd. Engaging your own crowd could have wider benefits to your business that go well beyond an injection of funds.
Kirsty Ranger, founder of IdeaSquares and creator of the Crowdcube preparation programme ‘Crowd10’, says “If you’re going to crowdfund you should understand that just like with other forms of investment you will work hard for the money. This means developing and mobilising your own network. Yes, Crowdcube has a very valuable and active investor base, but this is not to be relied upon as the sole method of reaching your target. You should prepare to validate your opportunity as much as possible with one (or a few) lead investors. This can be previous investors, known high net worth contacts, customers, suppliers, friends, family – the list is long and the ability to have a diverse investor base is the beauty of crowdfunding. If you are thinking of crowdfunding, please don’t let this put you off. Every successful campaign had to start somewhere and sometimes it’s just a case of knowing where to start.”
To get started and continue with your crowdfunding campaign, visit your pitch here.