Your application to raise money has been approved, your business has completed due diligence, and your investment terms have been finalized. Now that you’ve cleared so many pre-campaign hurdles, it’s no time to sink your equity crowdfunding offering’s odds of getting funded.
Reaching your fundraising goal requires planning, commitment, hard work, and persistence. Your campaign will likely only run for few months, giving you a limited window of opportunity to meet your target. In that short timeframe, even just a few missteps can derail your offering quickly.
Importantly, some fundraising efforts that feel natural – especially for entrepreneurs more experienced with the capital raising process – can steer your campaign off course. Do your best to dodge these five potential landmines.
1. DON’T chase one big fish
If there’s a big-ticket investor in your rolodex who has the means (and potential interest) to fund your entire offering, you may be tempted to focus nearly all your energy on wooing him or her.
Resist the urge. If you pin your hopes on catching one big fish but fail to reel him in, your offering could tank. The key to equity crowdfunding is engaging with (and campaigning to) a broad range of potential investors – low-dollar and high-dollar – to cast the widest net possible.
Ten investors who commit $10,000 apiece to your offering are as valuable as one who drops as $100K. Spread your campaign energy around to investors big and small.
2. DON’T have a 506(b) mentality
Since the public advertising (or “general solicitation”) of investment opportunities was banned for more than 80 years, entrepreneurs and investors have long been accustomed to conducting the capital raising process privately.
But if you’re conducting a 506(c) General Solicitation offering, you can’t go about it with a 506(b) Private attitude. You need to embrace the public, online nature of the modern fundraising process and tell as many people about your offering as possible in pursuit of generating investor interest.
Invite all of your contacts to your offering and bring it up in every networking situation. It may feel unnatural to talk about your capital raise with customers or post about it on social media, but it’s important that you do.
3. DON’T put business in the backseat
Campaigning for your equity crowdfunding offering is a full-time job, to be sure. You need to place a massive amount energy – yours and your staff’s – into the marketing and PR needed to reach and convert investors.
But that doesn’t mean your day-to-day business can be put on the backburner. Especially if you’re in the very early growth stages of your company, you need to continue to generate business traction throughout your fundraise.
Corporate accomplishments that take place during your campaign will enhance the credibility of your company and give you more material to publicize to the media, driving traffic to your offering. Generate as many company milestones as you can during your campaign.
4. DON’T stick to stagnated strategies
Let’s say you made a solid campaign plan before launching your offering, complete with in-person networking, webinars, and email marketing. After a month of success with those strategies, your offering’s funding progress starts stalling. What do you do?
You can’t consider your best-laid plans set in stone. Some campaigns start experiencing a ‘dip’ in investor interest at some point in their offering timeline. Rather than use that as a time to panic about why your plans aren’t working, you should capitalize on the opportunity to try a few different strategies.
Refresh your campaign plans and reallocate your marketing budget if your offering’s momentum slows. It never hurts to try something new – say, online advertising, content marketing, or media outreach.
5. DON’T forget to say thanks
An investor you met weeks ago just invested $15,000 in your offering. Great news! But you were notified of the commitment via email during a meeting, then forget to get in touch. Is that a problem?
Not necessarily… but maybe. Sure, investors will get email updates about your campaign and their contributions. But keep in mind that you’re conducting an equity crowdfunding campaign, not rewards- or donation-based one. Every investor you forget to thank is now an owner in your company.
Is a lack of gratitude the first impression you want investors to have of you as a business owner? We didn’t think so. Open the lines of communication with your new investors right away, and say thanks.